In a statement, the Celtic midfielder player claimed he was quitting following medical advice.
In an announcement, the 34-year-old said: `Having received medical advice from my surgeon and the Celtic club doctor, I feel my only option is to retire.'
Keane confirmed the news on the Celtic website: `Having received medical advice from my surgeon and the Celtic FC doctor, I feel my only option is to retire.
`I would like to send the manager, the staff, players and supporters my very best wishes for the future.'
Celtic manager Gordon Strachan said: `Roy Keane is one of the greatest ever players to grace the game of football. It was fantastic we were able to bring him to Celtic and it has been a privilege to work with him.
`Even in his short time with the club, Roy made a great contribution and played an important part in bringing success to the club last season.
`We were delighted to make Roy's dream come true when we signed him for Celtic and we were happy when he made our dream come true, by helping us to win the title.
`While we would have very much liked Roy to continue for the remainder of his contract, everyone at the club fully understands and respects the decision which he has made.
`Roy's retirement will be a loss to Celtic and, of course, a loss to football in general. We would all like to wish Roy and his family all the best for the future. Roy will always be welcome at Celtic Park.
`Obviously, we will now be making sure we strengthen our midfield in time for the season ahead.'
Celtic chief executive Peter Lawwell added: `Clearly, everyone hoped we could have enjoyed watching Roy at Celtic for one more season. However, given the medical advice which he has received, Roy feels this is the only option available to him.
'While we are disappointed, it is important Roy's health comes first and we fully respect the decision which he has made.
`Despite losing Roy, our supporters can rest assured that we are working hard to strengthen the squad for next season to face the domestic and Champions League challenges which lie ahead.'
Keane made his debut for the Hoops in the Tennent's Scottish Cup third-round defeat by Clyde in January.
The transfer, however, represented the fulfilment of an ambition for the Irishman.
Keane's injury problems date back to September 1997 when he suffered a knee injury while trying to foul Leeds United's Alfie Haaland at Elland Road and missed the rest of the season with cruciate ligament damage.
In September 2002 Sir Alex Ferguson announced Keane will be out for three months after undergoing a hip operation.
In July 2005 Keane was left out of United's squad for tour of Far East due to hamstring injury and the following month Ferguson admits he had a row with Keane at United's pre-season training camp in Portugal in July.
Keane announced his international retirement in October 2005 and on November 1 his blunt assessment of the 4-1 Premiership humiliation at Middlesbrough was pulled off the MUTV schedules. Seventeen days later he left United by mutual consent and on December 15 he signed for Celtic in an 18-month deal.
