The 39-year-old had been training with his former club Vasco da Gama in his homeland but had admitted defeat in his efforts to prolong his career.
"This decision was not easy, but I was no longer able to continue," Juninho Pernambucano told the club's official website..
"My body was no longer up to training and I could not apply myself as before. It is time to stop.
"I am very emotional. This is where I developed into a complete player and I made great friends here and experienced great moments.
"I'm retiring and do not know what I'll do going forward, but of course I will always follow the games of Vasco. I thank all the fans for their affection."
Juninho made almost 400 appearances in three spells with Vasco but it was at Lyon where he enjoyed most success, as part of the team which won seven successive French Ligue 1 titles from 2002.
He made 40 appearances for Brazil, scoring six goals. A noted dead-ball specialist, he scored more than 200 goals in his long career.
Vasco President Roberto Dinamite said: "I just have to thank this great human being. Juninho was a great athlete, very professional. Vasco thank him for everything."