A combination of Achilles and thigh injuries restricted Cleverley to just four appearances for Watford last season.
His contract with the Hornets expired at the end of June and he feels it is now time to hang his boots.
Cleverley came through the youth ranks of Manchester United and was part of the side's last squad to win the Premier League title in 2013.
Cleverley also turned out for the likes of Leicester City, Wigan Athletic, Aston Villa and Everton in his career and earned 13 caps for the England national team.
"Today I am announcing my retirement from football as a player,'' Cleverley wrote on Instagram.
"The last year has been immensely difficult trying to overcome the obstacles of injury. Unfortunately my body has failed me and just hasn't got the capacity to perform anymore.
"I haven't done much reflection just yet, but I'm trying to focus on a positive future and I'm excited about what that's going to bring. I would like to thank staff, teammates and fans at Leicester, Wigan, Aston Villa, Everton and England.'
"Special mentions must go to Manchester United, especially Paul McGuiness and Sir Alex Ferguson.
"The people and the club that gave me the foundations as a player and person and also the club that made my dreams come true. To come through the academy and represent the first team gives me immense pride."
"To all those involved with Watford Football Club. I have the privilege of calling this club home. To captain this club has been an honour and the staff, players and fans will forever be in my heart. The love you have shown me as a young loanee up to the moment I retire as a grown man I can never repay.
"Finally, the love and support of my wife, children, mum, dad and agent, I know it hasn't been easy on you guys at times but none of this would have been possible without you."
