Kolarov's contract at San Siro officially expires at the end of June, bringing an end to his two-season stay with the Italian giant.
The 36-year-old made just 15 appearances for Inter in all competitions, seven of those being starts, after joining from Serie A rivals Roma in September 2020.
He previously enjoyed a spell with Lazio in the Italian top flight prior to joining City in 2010 for a seven-year stint.
The 94-cap Serbia international won two Premier League titles, an FA Cup and two Carabao Cups with City.
In a statement released to ANSA on announcing his retirement, left-back Kolarov said: "I always knew that sooner or later this moment will come.
"Although I am sorry that I am closing one chapter of my life, I am grateful that I managed to achieve what has always been my dream.
"I thank all the people who followed me in this first part of my career."
"First of all, to every team-mate in the clubs in which I played as well as in the football team of Serbia, my homeland, which I have always represented with great pride.
"I thank the clubs, presidents, managers, coaches, technical staff, doctors, economists, physios and all those who helped in my career, and worked hard from the background."
Kolarov, who started his career with Serbian sides Cukaricki and OFK Beograd, intends to remain in football by taking up a new role.
"I am coming to the end of this phase in my life, feeling great satisfaction with what I have achieved," he said.
"Now I am already focused on my 'other' life in the world of football. I will soon start training as a sporting director and scout at the national football centre of the Italian Football Federation in Coverciano."