The former fly-half hangs up his boots aged 38 having won two World Cups during a 12-year spell with the All Blacks.
Carter bowed out of the international scene with a man-of-the-match display against Australia in the 2015 World Cup final and remains the highest points scorer in Test-match rugby union with 1,598.
He left Kobelco Steelers last April before he signed for Auckland Blues in June, although he failed to make an appearance for the Super Rugby club.
In a post on Instagram, Carter said: “I’ve thought about this on so many occasions but today is the day and I am very grateful that I can do it on my terms. I’m officially retiring from professional rugby.
“A sport I’ve played for 32 years which has helped shape me into the person I am today. I can’t thank everyone who has played a part in my journey enough – from my team-mates, opponents, coaching and management teams, sponsors and in particular you, the fans.
“A special mention to my friends and family who have supported and guided me through my career. Mum and Dad, thank you for everything you have sacrificed for me.
“My wife Honor for being my rock and allowing me to fulfil my dreams while raising our beautiful family – I can’t thank you enough.
“I’m excited about my next chapter in life and what that will look like. For now, I’m sad to walk away from playing but the timing is right. Rugby will always be a part of my life. Thank you.”