Hughes, who never received a call-up to the Wales squad, has not featured since September 2017 after suffering problems from concussion sustained during a pre-season match in August 2016.
After receiving advice from a specialist on a brain injury, the 28-year-old, who rejoined the Dragons in 2015 after a short spell away, has now revealed he will be retiring from the sport with immediate effect.
"A neurologist said that playing rugby wasn't an option due to two major trauma scars that I had sustained on my brain," he said. "The decision was made there and then."
Head coach Bernard Jackman was quick to praise the impact Hughes had during his time at the club.
He said: "I would like to take this opportunity to thank Adam for the huge contribution he has made to the Dragons."
Hughes becomes the third Dragons player in three seasons to retire after suffering head injuries, following Matthew Pewtner in 2016 and Ashley Smith in 2015.