The 35-year-old spent his entire 17-year club career at Kingsholm, making more than 250 appearances for the West Country side.
He was advised to retire by medical professionals after struggling to overcome a concussion injury that he suffered last summer.
"I am sad it is all coming to an end," said Hazell. "But at the same time I am proud to have played 17 seasons for my home town club. I can't really grumble.
"It started back in August. I got concussed, came back and then got concussed again. I worked hard to get back, and tried everything, but it still wasn't right. Ultimately, it was too much of a risk at this stage of my career to try and play on.
"For me, it's been a privilege to play for Gloucester. Watching the team as a youngster, having my family around me, it's made it a special experience."
Gloucester director Nigel Davies gave his thoughts on Hazell's retirement.
"He's a true servant, a true warrior who represents everything that is good about Gloucester, about the club and what it stands for," he said. "He's put his body on the line time and time again for the cause.
"It's a sad day to see him retiring. It was probably always at the back of his mind that this might be his last season, and he would have wanted to play a few more games, but he has given everything to the club."
Hazell won seven caps for England during his career.