The move comes two days after the four-time Pro Bowl selection told reporters he planned to retire after a 12-year career.
"I'm done. That's it. It's been a long career," the 34-year-old Incognito told the Buffalo News on Tuesday. "It's been a long career. My liver and kidneys are shutting down. Nothing I can't restore with some balance, but the stress is killing me.
"I went to a doctor's appointment the other day and they said, 'Listen, the stress is killing you, what are you doing?' And I said, 'Listen, I'm just doing what I love and that's playing football.' So that's why I'm done."
Earlier on Tuesday, Incognito tweeted at the NFL Players Association: "I'm done."
Incognito agreed to terms with the Bills last month, but saw his base salary reduced last month from $6.325 million to 3.65 million. The decision cleared $1.675 million in cap room for the Bills.
Last Thursday, Incognito fired his agency, Athletes First, on Twitter.
"@AthletesFirst You are Fired! I wish you guys nothing but the best moving forward. Thank you for all of your help and guidance along the way. It's time for me to go in a new direction," Incognito posted on Twitter.
While Incognito admitted to the Buffalo News that he's still not thrilled with the contract situation, he said he has moved on.
"The contract and all that (angered me) and all that, but (the decision to retire) has nothing to do with that," he said. "You know what it is. It's just about doing what's right. And that's it.
"I just want to be in the Hall of Fame. I think I'm there."
Incognito initially told Sports Illustrated's Peter King that he might come back "at the right price." Should retirement be the option, Incognito would have to return the $1 million bonus he received after restructuring his contract.
Bills running back LeSean McCoy reacted on social media by making a counteroffer to Incognito, who joins center Eric Wood in announcing his retirement this offseason.
"Wait wait NOO!! Wood and you ... listen 1500 yards I'll give u 300k CASH," McCoy wrote. "my favorite WHITE BOY EVER CANT retire lol... love u dog"
McCoy ran for 1,138 yards with six touchdowns last season.
Incognito has started all 16 games at guard in each of the last three seasons for the Bills. He was out of football in 2014 after being suspended by the Miami Dolphins in 2013 as part of a bullying scandal.