Her husband, who passed away in 2009, suffered from Alzheimer's for almost 20 years.
O'Connor retired mainly so she could care for her husband, who had been diagnosed with Alzheimer's.
For almost 25 years, O'Connor was the swing vote on numerous social issues, including abortion and other polarizing topics, and her minimalist and moderate opinions placed her squarely in the middle of a sharply divided court.
Retired Justice Sandra Day O'Connor, the first woman to serve on the Supreme Court, revealed that she is in the beginning stages of dementia and "probably Alzheimer's disease", according to a report Tuesday.
O'Connor made the announcement in a letter.
"As this condition has progressed, I am no longer able to participate in public life", 88-year-old O'Connor said in a statement.
O'Connor was President Ronald Reagan's first nominee to the high court.
She was 75 when she announced her retirement from the court in 2005. O'Connor's announcement came a day after a report on about the former justice stepping back from public life. Reagan, who died in 2004, also was diagnosed with Alzheimer's.
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In a further sign of the state's importance in the midterms, former President Barack Obama scheduled a stop Monday in Las Vegas. Biden says America was built on basic fundamental decency and "it is being shredded right now".
Highlighting her groundbreaking role as the first female USA justice, Roberts also called her "a towering figure in the history of the United States".
For more than a decade after leaving the court in 2006, O'Connor kept up an active schedule.
Over time, she emerged as the court's ideological center, casting key votes in cases on the most contentious issues of her era, including a ruling that helped preserve a woman's right to have an abortion and another upholding affirmative action - the use of racial preferences in student admissions - on college campuses. Scott O'Connor, one of the justice's three sons, told a Phoenix television station that his mother was "thrilled" her husband was "relaxed and happy".
In 2009, O'Connor was awarded the highest civilian honor in the United States, the Presidential Medal of Freedom, by President Barack Obama.
Interviewed in front of an audience in 2009, she said: "What would you feel?" If you think you've been helpful, and then it's dismantled, you think, 'Oh, dear.' But life goes on.
Chief Justice John Roberts has released a response to the news, calling O'Connor a "towering figure" and a trailblazer for women in the legal world.
In retirement O'Connor was an enthusiastic advocate for iCivics, an organization she founded that promotes civic education in schools through free, educational online games. The program, she observed, now reaches half of the young people in the United States, but she insisted that it should reach them all.
He added, "But I was not at all surprised that she used the occasion of sharing that fact to think of our country first, and to urge an increased commitment to civics education, a cause to which she devoted so much of her time and indomitable energy".