The First Sunday funnyman made the big announcement on Monday (03Dec12), hours after he was released from jail following a bar brawl in Seattle, Washington on Sunday (02Dec12).
The arrest appeared to tip Williams over the edge and in an on-camera interview with local news station KOMO TV, he told fans he was hanging up his microphone, admitting, "I'm kinda done".
However, a spokesman for his management team claims Williams wasn't serious about his retirement pledge and insists his current comedy tour will continue as planned.
A statement issued to TMZ.com reads: "Katt is definitely NOT retiring. He will be moving forward with the tour... Friday is Texas, Saturday New Orleans, and on to Alabama."
"The reason why he made remarks was due to him feeling totally disrespected by all the things that happened to him in the city of Seattle. He had a moment where he felt very unappreciated. He now just wants to move forward from those unfortunate events and give his fans outstanding shows from this point forward."
Meanwhile, Williams is facing more legal woes - he has been slapped with two counts of fourth degree misdemeanour assault relating to the weekend bar fight, after allegedly refusing to leave the World Sports Grille and threatening the manager with a pool cue. He is also accused of throwing a cigarette at a woman outside the venue.
The charges are the latest in a long line of legal issues for the star - he was arrested for reportedly pulling a gun on actor Faizon Love in October (12) and he was busted for battery in November (12).