The discussion at the cabinet meeting will mainly focus on appointing Prince Felipe as the new head of state, BBC reported.
The 76-year-old monarch was named the king of Spain Nov 22, 1975, two days after the death of General Franco, who had nominated him as his successor and became Spain's first crowned head of state for 44 years.
Prime Minister Mariano Rajoy said the meeting would also aim at the "constitutional measures" needed to clear the way for the succession since the Spanish constitution does not have a precise law regulating abdication and royal succession.
King Juan's decision was announced to the nation by Rajoy, who called a press conference at a short notice to make the "institutional declaration".
Thousand of protestors Monday evening took to the squares of several Spanish cities, demanding a referendum on whether the monarchy should continue.
Felipe Juan Pablo Alfonso de Todos los Santos de Borbon, the Prince of Asturias, who will be called King Felipe VI, would inherit an institution whose reputation has been tarnished by scandals in recent years.
Juan Carlos was heavily criticised for extravagant vacations while his country was suffering an economic crisis.
He also suffered a series of health issues such as a benign tumour which he had removed and a broken hip, which he suffered in April 2012 while elephant hunting in Botswana.
The monarch later took the unprecedented step of apologising to the nation, although that did little to save his popularity from falling to the lowest levels of his reign.