The South African has made 79 appearances in four seasons with the Sarries, leading them to the 2014-15 Aviva Premiership title as club captain.
"It's been a very tough decision to make," Hargreaves said in a statement issued by the club. "I've suffered a number of concussions in the last two seasons and after seeking medical advice I've come to the conclusion that the risk is outweighing the reward. I have a young family, I have to make decisions that are right by them and although this was a hard decision for me personally it's one that I feel is the right one to make.
"My period at Saracens has been the best four years of my life - It's been an absolutely phenomenal time. Everyone at Allianz Park; the players, the coaches, the backroom team and the fans, have all contributed to this incredible experience. It's an experience that I didn't expect when I arrived, but I leave as a Saracens man to the core. I've grown as a rugby player but more importantly, I've grown as a human being."
Saracens director of rugby Mark McCall added: "The welfare of our players is of paramount importance - we are fully supportive of Alistair's decision. Since arriving in 2012 Alistair has developed into one of the most influential players within the squad. He has played a key role in our recent success with his character, hard-work and leadership coming to the fore over the last four seasons. We wish Alistair, his wife Carmen and their young son the very best for the future."
Hargreaves departs Saracens with the side second in the nascent Premiership table.