The 33-year old left-back made the announcement at a press conference on Thursday afternoon and also revealed that he accepted an assistant coaching position at the club.
"I am going to be a sponge and learn as much as I can from this coaching staff," Barrett said. "I'm sure I'll have my own ideas along the way, but this is a great opportunity for me to soak in as much knowledge as they can pass on and take it down the road and see what that it turns into for me."
Dynamo chief operating officer Chris Canetti took the chance to thank Barrett for his service to the club which began in 2006.
"On behalf of the Dynamo organization, I would like to thank Wade for his services as a player, both on and off the field," Canetti said. "His contributions and leadership have been critical to our success. We welcome him to the coaching staff and wish him well in the next phase of his soccer career."