The ex-Arsenal striker, 36, launched a legal case against Pompey, having left the club following a six-year stint in 2012.
But Kanu, who hit the winner in Portsmouth's 2008 FA Cup final win over Cardiff, said: "I dropped the matter of wage money because I knew the club was in big problems.
"I did not ask the club for millions. The reason I have not returned is because it is time for me to hang my boots up as a player.
"Life goes on and forgiveness is the No 1 priority for me. I just enjoy life and hope the best for my former team."