Yahoo! Sports was the first to report the announcement.
The 30-year-old center played just five games over the past two seasons and has determined that he is unable to make a complete recovery from stress fracture in his left ankle and tendon strain.
At 7-foot-6, Yao entered the league as the No. 1 pick in the 2002 draft and became literally and figuratively the largest symbol of the NBA's growing expansion around the world and particularly in Asia.
Yao was an eight-time NBA All-Star and in five seasons he was voted onto the league's second or third All-NBA team. He averaged 19.1 points and 9.3 rebounds and 1.9 blocked shots in his career.
He arrived in Houston in 2002 as towering and iconic as the durable Great Wall of China, yet over the course of his NBA career Yao's image became increasingly fragile. After missing just two games due to injury in his first three years in the league, he was sidelined for 250 over the past six seasons.
Yao would have become a free agent at end of the current lockout and had spent months trying to rehabilitate his ankle for one more chance at playing. He has said his desire was to remain in Houston to play for the Rockets.
However, he did not want to jeopardize his health for life after playing. Yao's parents were concerned enough about his welfare that they did not want him to attempt a return to the NBA after the broken bone in his foot that was suffered in the playoffs of May 2009.
Following the birth of his daughter that same spring, Yao said: "I can only try so many times. I want to be able to run around and play with my child, not always wear a cast and use these crutches."
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