Muehlegg won three gold medals at the Salt Lake City, but was stripped of the 50km gold when he tested positive for the blood-boosting drug darbepoetin.
The International Olympic Committee decided he could keep the golds for the 30km and 10km as he passed doping tests following those races.
The German-born skier is also facing a lengthy ban from the International Ski Federation and at 31 has decided to retire now.
"I am innocent and I am going to prove it"
"I am retiring because I want to," Muehlegg told Spanish newspaper ABC.
"The last 50 metres of the 50km race, I knew that they were going to be the last of my career.
"I am innocent and I am going to prove it," he said.
"I am calm, I have not used any tricks and I have not done anything illegal. I am preparing with my lawyers; I hope that next week I have some news."
Meanwhile Norway is taking the IOC to court in a bid to have all medals withdrawn from athletes caught for doping offences in Salt Lake City.
The Norwegians believe the IOC charter says that any athlete caught cheating at an Olympic Games should forfeit their medals.