The 34-year-old, who began the coaching role last summer, has been advised to hang up his boots on medical grounds as he reaches the end of his current contract.
"It's never an easy decision to make, but it's the right thing to do," Purches told the club's official website. "I've given it everything I've got to get to this point, but unfortunately I'm not quite back to where I want to be.
"The staff here have done everything they can though and I can run and kick a ball again, which is something that I wasn't sure I would be able to do at one point.
"It's time to move on to the next chapter and a coaching career can be longer than a playing career, so I have a lot to learn and to look forward to. My aim now is to try and bring through the next generation of players for this club."
Purches made more than 300 appearances for the Cherries over two spells at the club.