Kuechly fought back tears in a video posted to the Panthers' Twitter feed, saying he couldn't play the game at the level he wanted to.
"For me, now is the right opportunity to move in a different direction," Kuechly said. "There's only one way to play this game since I was a little kid -- to play fast, to play physical and to play strong, and at this point, I don't know if I'm able to do that anymore and that's the part that is the most difficult."
Kuechly has played in the NFL for eight seasons, all with the Panthers who drafted him ninth overall in 2012.
The seven-time Pro-Bowler received a five-year contract extension in 2015 that went through 2021.
In each season of his career he amassed more than 100 tackles and in 2019 and this season became just the fifth player in league history to record 100-plus tackles in eight straight campaigns.
He missed just 10 games in his career, and none since the 2017 season. But he has suffered at least three reported concussions.
Kuechly, who did not cite any specific health concern for his decision, made his farewell video in the linebackers room at the Panthers' Bank of America Stadium.
"The memories I have from this place and this organization and being on the field with these guys, they'll never go away," he said.