Wales scrumhalf Peel retires
Peel, 34, won 76 caps for Wales, winning the Six Nations Grand Slam in 2005 and 2008 and captaining his country at the 2007 World Cup.
He also played for the British and Irish Lions on their 2005 tour of New Zealand.
But he has made only 20 appearances for club side Bristol since 2014 and is to join the coaching staff of the English second-tier leaders until the end of the season.
"It was a tough decision to make because I love the game, but following medical advice I really had no further choice," Peel, Bristol's captain, said in a statement.
"I've been fortunate enough to enjoy some incredible experiences during my playing career and have met some fantastic people.
"I'm grateful to Bristol for their support and will continue to work hard alongside the coaching team to ensure the season ends on a high."
Agence France-Presse