General Dalbir Singh will be succeeded by General Bipin Rawat.
Army chief General Dalbir Singh Suhag on Saturday retired after 43 years in service. General Suhag thanked the government for giving the army a "free hand" to conduct operations.
General Dalbir Singh will shortly hand over charge to his successor General Bipin Rawat.
"After 43 years of service to the nation I superannuate today. I salute the martyrs who made supreme sacrifices," Dalbir Singh said after inspecting a guard of honour at the South Block lawns in New Delhi.
"Gratitude to the Prime Minister (Narendra Modi) for the support and free hand in conducting operations. For impetus on modernisation," General Dalbir Singh said.
He also thanked the government for "granting one rank one pension (OROP) to the ex-servicemen".
Praising the strength of the Indian Army, he said: "Indian Army is the finest and strongest army in the world. Our leaders are competent and soldiers are brave."