"He's done," the source said.
Under league provisions, Roy will get paid the terms of his contract and his salary will come off Blazers cap after one full season away from the team. Roy, 27, has four years and $68.6 million remaining on his contract. In the final $19.9 million season, only about $4.8 million is guaranteed.
Roy's knee problems helped limit him to 47 games last season. The sixth overall pick of the 2006 NBA draft, Roy averaged 19 points and 4.7 assists in five seasons in Portland. He was a three-time All-Star.
ESPN.com first reported Roy's possible retirement.