The 89-year-old Thomas, dean of the White House press corps, has long been a fixture in Washington and has been lauded as a pioneering journalist who has covered presidents since 1960.
Known for her confrontational questioning, Thomas apologized for comments that were captured on video and have spread widely on the Internet. On the May 27 video, Thomas says Israelis should "get the hell out of Palestine," suggesting they go to Germany, Poland or the U.S.
Hearst announced her retirement, effective immediately, shortly after White House press secretary Robert Gibbs called her remarks "offensive and reprehensible."
The White House Correspondents Association also issued a rare statement, calling her comments "indefensible."
"Many in our profession who have known Helen for years were saddened by the comments, which were especially unfortunate in light of her role as a trail blazer on the White House beat," said the statement, signed by journalists who are officers of the association.
Thomas had been scheduled to speak at the June 14 graduation of Walt Whitman High School in the Washington suburb of Bethesda, Md., but Principal Alan Goodwin wrote in a Sunday e-mail to students and parents that she was being replaced.
"Graduation celebrations are not the venue for divisiveness," Goodwin wrote.
Thomas wrote on her website that "I deeply regret my comments I made last week regarding the Israelis and the Palestinians."
She added: "They do not reflect my heart-felt belief that peace will come to the Middle East only when all parties recognize the need for mutual respect and tolerance. May that day come soon."
The national director of the Anti-Defamation League, Abraham H. Foxman, said Sunday that Thomas' apology didn't go far enough.
"Her suggestion that Israelis should go back to Poland and Germany is bigoted and shows a profound ignorance of history," Foxman said in a statement. "We believe Thomas needs to make a more forceful and sincere apology for the pain her remarks have caused."
Thomas began her long career with the wire service United Press International in 1943, and started covering the White House in 1960, according to a biography posted on her website. She became a columnist for Hearst in 2000.