Bailey, 36, was a training-camp cut by the New Orleans Saints in August. After playing the first five seasons of his career with the Washington Redskins, he played for the Denver Broncos for the past 10 seasons.
Bailey was a 12-time Pro Bowler and three-time first-team All-Pro.
His agent, Jack Reale, said Bailey chose to "pursue another career path" instead of returning to the NFL this season.
"At this time, Champ has decided not to accept on-field opportunities and pursue another career path," Reale said. "He could be playing right now if he wanted to be."
"To play the end of this season and maybe next season, given his opportunities, he could have done that," Reale said. "But he decided it was best to move on to those other areas. I think everybody on his team agreed that was a good approach."
He was limited to five games during the regular season last year because of a sprained foot, but he did play in all three of Denver's playoff games as they reached the Super Bowl.
The Redskins drafted Bailey with the No. 7 pick in the 1999 draft, and he made the Pro Bowl in his second season. Between 2000 and 2012, he was selected to 12 of 13 Pro Bowls. Washington dealt him to Denver for Clinton Portis before the 2004 season.
Bailey finishes his career with 52 interceptions, which is tied for No. 26 in league history.
- Paul Palladino