Ethiopian world marathon record holder Haile Gebrselassie tearfully announced his retirement on Sunday after dropping out of his first New York City marathon.

"I am retiring," the twice-Olympic 10,000 metres champion told shocked reporters at a news conference.

"It's time to step away and give chances to the youngsters," he added.

Gebrselassie, 37, who set 27 world records in his illustrious career, pulled out after the halfway stage as he and the lead men's pack were running downhill from the Queensboro Bridge into Manhattan.

The Ethiopian grabbed at his right knee, bent over and grimaced in pain as the others continued to First Avenue.

A medical examination on Saturday had revealed fluid and tendinitis in his right knee.

New York Road Runners chief Mary Wittenberg said Gebrselassie's status for the race had been doubt following his when he had fluid drained and received cortisone.

"The odds of him not starting were quite high as of yesterday," she said.

"But he really, really wanted to start.

"He woke up today and was hopeful. When I saw him at the start he said he was ready to really give it a good hard try," she added.

Wittenberg said she left the course and ran to the Ethiopian's hotel after she got word he had announced his retirement to reporters, who gasped in surprise at the news.

"We aren't open to accepting resignations tonight," Wittenberg said she had told Gebrselassie.

"My advice was maybe to reserve judgment on the future," she said, "But this is the kind of athlete that has performed to the highest of highs. He may very well decide that it's enough."

After moving the track to the roads, Gebrselassie clocked two hours four minutes 26 seconds to break Kenyan Paul Tergat's world marathon at the 2007 Berlin race.

In the following year he became the first man to run under two hours four seconds when he clocked 2:03:59 in Berlin.

"Many people consider Haile the greatest distance runner of all time," USA Track & Field spokeswoman Jill Geer said.

"What he did was to elevate the standard for everyone. What makes Haile really special is he's not just fast, he's really an ambassador for the sport, one of the most lovable people in the sport. He is a person who lights up rooms."