Wales star Powell retires
Powell has been unable to get over his latest injury problem and the No.8 has admitted defeat in his bid to return to action.
The 35-year-old, who played for the British and Irish Lions in 2009, had been playing for Merthyr and helped them win promotion to the Welsh Premiership after joining from Newport Gwent Dragons in 2015.
"Andy's found it hard to get over his current knee injury and will not be forgotten," said Merthyr Chairman Peter Morgan.
"He was a big part of our success last season as captain. Andy had plenty of time for everyone, he will be sadly missed on the field and off but will always be welcome to our club."
Powell, who won 23 caps for Wales, had spells with Leicester, Scarlets, Cardiff Blues, Wasps and Newport, as well as a year in Rugby League with Wigan.
He made his Wales debut in 2008 but after a game in February 2010 he was famously arrested for driving on the hard shoulder of the M4 in a golf buggy.
Powell was removed from Wales' Six Nations squad after that incident, but returned to the team later that year and went on to play nine more times for his country.
Agence France-Presse
