
Aragones revealed his decision after Spain qualified for Euro 2008 in Austria and Switzerland by beating Sweden 3-0 in Madrid late Saturday.
"I have an expiry date and you all know that. It's like milk. When it goes off you don't drink it," Aragones said.
The 69-year-old coach took charge of the national team in 2004. He previously coached several clubs including Atletico Madrid, Barcelona and Valencia.