The 31-year-old, who was concussed in Leinster's opening Pro12 game, was referred to a neurologist amid concerns over his susceptibility to concussion as well as the length of recovery time.
Tests revealed that it would be in the best interests of McLaughlin, who reserved praise for Leinster's medical staff, to stop playing.
"I want to acknowledge the medical team at Leinster Rugby and the IRFU and the care they have provided me with over my career. Particularly the staff in Leinster who have gone above and beyond to treat and rehab me back from several injuries over the past ten years," McLaughlin told Leinster's official website.
"We are very lucky in Leinster to have both a medical and coaching staff who put the players' welfare ahead of everything else. I would never have enjoyed the success and the long career I did without the dedication and commitment to the players they display on a daily basis."
McLaughlin, who won eight caps for Ireland in his career, is the second player to retire due to head-related injuries in September following Jonathan Thomas's retirement earlier this month.