The British fighter was beaten by Kell Brook in his last fight in February and has now decided to call time on his career in the ring at the age of 35.
The decision marks the end of a glittering career in the sport which saw Khan win an Olympic silver medal in 2004 as a teenager before going on to become a world champion in the super-lightweight division.
Khan wrote on Twitter: "It's time to hang up my gloves. I feel blessed to have had such an amazing career that has spanned over 27 years. I want to say a heartfelt thanks and to the incredible teams I have worked with and to my family, friends and fans for the love and support they have shown me."
Khan's rival Brook announced his retirement last weekend and Khan had strongly hinted that he would call it quits following the loss earlier this year.
He said: "I've had 40 fights, winning two world titles, fighting in America and around the world. I need to sit down with my family. But it is more towards the end of my career.
"The love for the sport isn't there anymore. In the ring, I didn't have excitement and that push. That's maybe a sign that I should call it a day. But let's see."
Khan explained that he "struggled to get into the groove" during the bout with Brook.
He said: "I felt like I just can't get in the groove. I thought maybe it was just because he was that good. And today again, I tried to get in the groove, and I just couldn't really get in the groove.
"It's something to think about, definitely. I've always said I don't want boxing to retire me, I want to retire from boxing before it does that. Punishment like that sometimes in boxing, I know I showed a big heart and took some big shots today, but sometimes too much of that can be harmful in the future."