The William Haggas-trained colt saw his career come to an end on Saturday when he was beaten into fourth place in the Qipco Champion Stakes, the first and only defeat of an otherwise impeccable career during which he won 10 races - including six Group Ones.
Now set to become a stallion, the bay will be based at Shadwell's Nunnery Stud from next year for a fee that is yet to be announced.
Owner Sheikha Hissa said: "On behalf of my family, I am delighted to confirm that Baaeed has now been retired to stand at Shadwell's Nunnery Stud for the 2023 season, where he was born in 2018.
"We are all so proud of what Baaeed has achieved and count ourselves very fortunate to have shared his journey with him. I would like to thank everyone at William's for managing his career so expertly and the teams at Shadwell and Derrinstown for raising him to be the champion that he is.
"His regal pedigree and outstanding conformation will stand him in excellent stead at stud and hopefully attract the top breeders from around the world, so that together we can give Baaeed every chance to prove himself as exceptional a stallion as he was a racehorse."
Haggas added: "We have enjoyed an incredible journey with Baaeed over the last 18 months. His speed, brilliance and raw ability combined with an extraordinarily good temperament have made him a joy to train.
"He is unquestionably the best horse ever to have walked through the doors at Somerville Lodge and I hope he enjoys as fruitful a career at stud."
Angus Gold, Shadwell's racing manager, added: "We have been blessed to have Baaeed racing in the Shadwell silks for the last two seasons. Since the first day he set foot on a racecourse he has demonstrated his class, incredible turn of foot and outstanding temperament at every opportunity, highlighted by his magnificent victory in the Juddmonte International at York in August.
"As well as being a beautifully balanced horse with enormous presence and his exceptional temperament, Baaeed's greatest asset was his remarkable turn of foot which has been evident on so many occasions, and we are all very excited and proud to launch his stallion career at Nunnery Stud for 2023."