The 37-year-old is one of a rare breed in modern sport having committed himself to the Warriors for over a decade.
Gillies is the leading appearance maker at Warriors in the modern era with a staggering 288 games in all competitions - a record never likely to be eclipsed.
The giant second row, who has also played at Bath Rugby, Richmond and Llanelli, is widely regarded as one of the best lineout operators ever in the top-flight and won England A honours in 2000.
The Glasgow-born lock will forever be remembered by Worcester fans as part of the unbeaten National Division One promotion winning team of 2003/04.
"It's been a difficult decision for me to make and I always knew it would be tough to stop playing, but I am excited by the future and the next stage of my life," said Gillies.
"Physically I feel I could continue for a few more years. However, an opportunity has been presented to me to look to the future and it truly feels like the time is right for me to make this move.
"I have a health and nutrition business that is rapidly expanding and it is proving already to be hugely successful. It is also a busy time for me as my testimonial committee has a full calendar of events planned over the coming year for which I am extremely grateful.
"I know being a one-club man is a rarity these days, but I do feel like that at Warriors. I have always enjoyed being part of the set-up here and the challenge of putting this club up with the elite. I look forward to continuing my strong relationship with the club.
"Over the years a vast number of people have played a crucial part in my career. I would like to thank every one of my team-mates, the coaching staff and support staff that I have worked with. And, of course, the Worcester fans who have been brilliant towards me on every step of my journey.
"A special thank you to Cecil Duckworth for everything he's done for me personally, for this club and the city. He is an incredible individual who has given so much. Hopefully this season will be a success because no-one deserves it more than him."
Dean Ryan, Director of Rugby at Warriors, paid tribute to Gillies' contribution at Sixways and said: "Craig has been a fantastic servant to Worcester Warriors over the last 11 years. He is the first real Warrior of this club and has given so much to the cause here.
"The values that Craig has illustrated over his time at Warriors are the framework for others to follow. His attitude and application has been outstanding and he has been a role model for so many.
"Craig now has new ventures and opportunities to explore at this stage of his life and so we wish him every success with that and in the future."
Cecil Duckworth CBE, Executive Chairman at Warriors, praised Gillies for his 'magnificent contribution' and 'total professionalism' during his playing time at Sixways.
"For many years Craig was simply the first name on the team sheet and I always remember our first promotion season to the Aviva Premiership when he was immense. I cannot speak more highly of him as a player or as a person.
"Craig will always stand alongside the likes of Tony Windo and Pat Sanderson as true legends at Warriors.
"He will always remain a key part of this club and we will continue to support him as he concentrates on other opportunities away from rugby."