The Premier League title winner announced his decision after losing a lengthy battle with an injured knee.
He will now concentrate on his business interests and will be back working with the Premier League champions in an ad hoc off-the-field role.
“Once a blue, always a blue," he declared today with the trademark grin that made him so popular with peers and supporters alike.
“City has always been my spiritual home and where I enjoyed my best years as a player. Being part of the side that ended the long wait for silverware - in 2011 and 2012 - was very special. It kick-started this new era and the club has never looked back. What has happened since has been amazing.
“I feel lucky to have been asked back to help spread the City message and can't wait to get going. I know it will be fun because City fans are incredible and always have been."