Cahill, 36, won every major domestic trophy during a glittering spell with the Blues between January 2012 and August 2019.
The 6ft 3in defender lifted the Premier League and FA Cup twice, the League Cup once, the Europa League on two occasions and the Champions League in 2012.
In a statement posted on social media, Cahill said: “Football is a game that has given me so much enjoyment and success and as I make the decision to hang up my boots I can honestly say I gave it everything I had.
“I’ve achieved things I once dreamt of, From amazing highs like winning the Champions League and Premier League, to the privilege of captaining my country and Chelsea in an FA Cup-winning team, which will remain with me forever.
“A special thank you must go to my amazing family who have supported me and been there every step of the way. I now have the opportunity to spend some quality time with them which is something I am looking forward to.
“Beyond that, football will always be part of who I am and what I love so this is just the end of this chapter. For me it is important to look forwards not backwards as a new chapter in my life begins.”
Cahill was capped 61 times times by the Three Lions, scoring five times.