The octogenarian is Europe's longest-reigning living monarch. She is one of the most popular figures in Denmark, often seen chain-smoking or roaming around the country unescorted.
At the age of 70, she traveled to Afghanistan to visit Danish troops and wore a military jumpsuit during the meeting.
Danish Prime Minister Mette Frederiksen released a statement about the surprise news, thanking the monarch "for her lifelong dedication and tireless efforts for the Kingdom."
"Queen Margrethe is the epitome of Denmark and throughout the years has put words and feelings into who we are as a people and as a nation," Frederiksen said.
The Associated Press contributed to this report.