Reddy, who was accorded a ceremonial farewell on superannuation, took the salute at the Parade Grounds at Central Police Lines in Amberpet, Hyderabad.
Andhra Pradesh high court had on Sunday rejected Reddy's house motion plea seeking extension of his term for one more year (till the end of September 2014), against the decision of Central Administrative Tribunal (CAT) which had refused to grant him interim relief to continue him as the head of state police force till the end of September 2014.
A division bench of Justice Ashutosh Mohanta and Justice D Seshadri Naidu dismissed Reddy's plea.
Reddy had last week moved the house motion in the AP high court against the decision of CAT which had declined to grant him interim relief after he had challenged the state government's decision about not extending his services in the wake of a CBI inquiry pending against him for allegedly amassing disproportionate assets.
It is learnt that ACB Director General B Prasada Rao is the front runner to replace Reddy as the new DGP.
Earlier, addressing the police personnel, Reddy said strength of police force has crossed the one lakh mark and reached 1,29,578.
'Dial 100'-- a centralised system on the lines of an emergency response agency like '911' in the US was launched as part of people friendly steps that also included sub-controls for assistance to public, he said.
"The challenge of ongoing agitations (over bifurcation of state) is met with restrain but in a highly effective manner," Reddy said, adding the state police also achieved great success on the anti-naxal front within and outside AP.
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