The 32-year-old, who won 102 international caps, left Juventus last month after nearly 18 months with the Serie A champions and had been tipped to return to England's Women's Super League.
"My dear friend football, it's time to hang up my boots and retire as a professional footballer," Aluko tweeted.
"Thank you football for everything you've given and taught me. Thanks for the full circle moments & crazy unexpected journey."
Aluko, who previously played for Chelsea and in the United States, was part of the Great Britain team at the London 2012 Olympics.
In a letter on the Players' Tribune, starting 'Dear Football', she wrote: "When we first met 25 years ago, I could never have imagined the crazy, unbelievable journey you would take me on.
"You have given me the dream of playing in the US, the pride of representing England, the thrill of winning titles with Chelsea, the adventure of playing for Juventus in Italy," she added.
"Whenever I have faced obstacles, you have shattered them. Whenever I have had great expectations, you have exceeded them."
The forward, who is also a trained lawyer, scored 33 goals for England, with her last international appearance coming in 2016, the same year she made misconduct allegations against then England boss Mark Sampson.
That episode concluded in October 2017 when an investigation found Sampson had made racially discriminatory remarks to Aluko and fellow player Drew Spence. The FA apologised to both players.
After announcing her Juventus departure in November, Aluko detailed how she had found life difficult in Italy.
Writing in her Guardian column at the time, she said: "Sometimes Turin feels a couple of decades behind in terms of its general openness to different kinds of people.
"I have grown tired of walking into stores and feeling as if the owner expects me to rob the place. There is only so many times you can arrive at Turin airport and have the sniffer dogs treat you like you are Pablo Escobar."