Faulk, 36, appeared in just seven games last season as he tried to come back from an anterior cruciate ligament tear he suffered in the 2010 season. He hadn't played in any games this season.
He was New England's second-round draft pick in 1999. He rushed for 3,607 yards and 16 touchdowns and caught 431 passes for 3,701 yards and 15 more touchdowns in 161 games with the Patriots.
He is the team's all-time leader in career all-purpose yards with 12,349 and return yards with 5,041.
"Kevin Faulk helped define the way an entire generation of Patriots fans have come to view and appreciate our brand of football," Patriots Chairman Robert Kraft said in a statement.
"His work ethic, enthusiasm for the game and clutch performances, especially on third down, earned him the respect of his coaches, teammates and fans alike. He retires a Patriot whose career will always be celebrated for helping deliver three Super Bowl Championships to New England."