Perry joined Warriors from French side CA Brive in the summer of 2011 and also enjoyed a four-year spell at Bristol.
The Wolverhampton-born back had previously played for Coventry after coming through the junior ranks at Dudley Kingswinford RFC, where he spent seven seasons.
During a successful career, Perry won 14 caps for England and featured in the 2007 Rugby World Cup. He is also a former England A captain.
He scored a sensational solo try against New Zealand on his England debut after charging down a kick and racing 60 metres to touch down.
Perry said: "Unfortunately, following the injury to my knee earlier this season, it has not been possible for me to return to full fitness despite the best efforts of myself and the Warriors medical team, and specialist opinion is that I cannot continue a career in professional rugby.
"It is extremely hard to accept the decision that I must retire because, having started playing at the age of seven, rugby has always been a big part of my life. I very much hope to continue to be involved in rugby in some capacity.
"I'd like to take this opportunity to thank all the fans for their support during my time at Sixways, the coaches I've had over the years and most importantly my wife Kimberley, who has been by my side during every high and low I've experienced."
Warriors Rugby Operations Director Corin Palmer said: "Shaun's experience has been an asset to the club both on and off the pitch and he has helped nurture some of the younger squad members.
"He has struggled to return to full fitness following a serious knee injury and everyone at Worcester Warriors has been saddened to hear that he can no longer continue his rugby career.
"We thank him for his efforts during his time at Sixways and wish him all the best for the future."
RPA Rugby Director David Barnes said: "Shaun epitomised the hard work which is required to become a professional rugby player and reach the highest level of the sport.
"He is old school in as much as he fully appreciates the balance between rugby and the 'real world', having combined a career as a welder with playing for Coventry, before progressing to the Premiership with Bristol.
"Given his personality and determination to succeed I am sure he will make a seamless transition to life after rugby.
"During his playing career for both club and country Shaun has always been extremely popular amongst his playing group and will be a huge loss to the game. We would all like to wish Shaun and his family the very best for the future."