The 32-year-old started the season on the team's physically unable to perform list, making him eligible to return this week, but he had not recovered from a strain sustained during the pre-season.
Ratliff, who has reached the Pro Bowl four times, said in a statement: "First, let me say thank you to the Dallas Cowboys and Jerry Jones for taking a chance on me in 2005. I have thoroughly enjoyed my time with the Cowboys, and it was always my desire to begin and end my career here in Dallas. But I understand this business, and now it's time to move on, turn the page and begin again.
"To all my teammates, I want to wish them nothing but the best. Stay strong, keep fighting and always believe. I'm sorry I couldn't be there for you, but I will always support you and value our time together.
"And lastly, to all the Cowboy fans, I want to say it was an honor to play for you. Cowboy fans are the best fans in the NFL, and I thank each and every one of you for the support and love you have shown to me these past nine years. I will miss you."
In his eight seasons with the Cowboys, Ratliff made 27 sacks and four forced fumbles.