The 34-year-old had been expected to quit the sport this summer before officially announcing his plans on Monday morning.
Wilkinson and his Toulon teammates face Saracens in the Heineken Cup final in Cardiff on Saturday ahead of their Top 14 showdown with Castres the following weekend.
The veteran, who started his career with Newcastle Falcons, was part of the England squad that won the World Cup in 2003. His last-gasp drop goal sealed a 20-17 victory for England in the final against hosts Australia.
He retired from international rugby in 2011 with 91 caps to his name.
"I would like to take this opportunity to formally announce my retirement from playing rugby," Wilkinson told Toulon's official website. "It goes without saying that I have an enormous number of people to thank for their support from all around the world but especially here in France and in England.
"This however is not at all the time to be concentrating on this as I would like to focus all my attention and energy on the team and these final two games of the season.
"I sincerely thank you all for everything you have given me and for making these last seventeen years something I will never forget."
Wilkinson joined Toulon from Newcastle in 2009.