The 34-year-old Sydney FC stalwart, who earned 94 caps for the Socceroos, has made just nine appearances this A-League season.
"Injuries have plagued my last couple of years," Emerton told a news conference. "I'm almost 35 now...it catches up with everyone at some stage."
The former Blackburn Rovers captain, who played at the 2006 and 2010 FIFA World Cups™ and scored 20 times for his country, said he would remain involved in the game including coaching children.
"My playing career is over but my involvement in football won't end. I'll be working with the Football Federation (Australia) in the future," he said.
The right midfielder or attacking right-back moved to the domestic A-League in September 2011 after almost a decade in the English Premier League.
But he has struggled this season and was substituted early during the Sky Blues' derby defeat to Western Sydney over the weekend.
Emerton turned professional with National Soccer League side Sydney Olympic in 1996 before transferring to Dutch side Feyenoord where he took a UEFA Cup winner's medal in 2002. He signed for Rovers in July 2003, making 247 appearances for the Premier League side.
Only Mark Schwarzer and current captain Lucas Neill have more caps than Emerton, who last played for his country in December 2012.