It will be the first time the Blue Jays have retired a number worn by one of the team's players in the club's 35-year history. Jackie Robinson's No. 42 was retired by Major League Baseball in 1997.
Team president and CEO Paul Beeston said Tuesday that Alomar is "arguably the best second baseman of all-time."
In five years with the Blue Jays, he helped them win the World Series in 1992 and 1993.
"This is an honor that I was not expecting," Alomar said in a statement. "I knew my numbers were worthy of consideration for the Hall of Fame but for the Blue Jays to select my No. 12 to be the first number they retire is a great honor. I am truly blessed to be a Blue Jay and I'm looking forward to the ceremony."
Alomar and former Blue Jays general manager Pat Gillick will be inducted into the Baseball Hall of Fame on July 24.
Alomar said he was caught by surprise when Beeston called to tell him about retiring his number.
"I was speechless." Alomar said. "I didn't know what to say. When I came to play for this organization all I wanted to do was to win games. Last night I couldn't sleep but I want to thank the whole organization, Paul Beeston, Cito Gaston and especially the fans for embracing me since Day 1."
A 12-time All-Star and 10-time Gold Glove winner, Alomar and outfielder Joe Carter joined the Blue Jays in December 1990 in a trade with the San Diego Padres for infielders Fred McGriff and Tony Fernandez.