The Browns placed Stephenson on their reserve/retired list, the team announced Friday.
The move ended a brief but turbulent tenure in Cleveland for Stephenson, who signed a one-year contract with the team for $2.5 million in March.
The deal included $1 million guaranteed, which Stephenson will not collect because of his decision to retire, according to Cleveland.com.
Last month, the 29-year-old Stephenson was suspended for the first two games of the 2018 season by the NFL for violating the league's policy on substance abuse.
That punishment would have cost Stephenson $294,117 in salary and bonuses. Stephenson also was fined $84,435 by the Browns for missing the team's mandatory minicamp.
Stephenson spent the last two seasons with the Denver Broncos, starting a career-high 12 games in 2016.
A third-round pick of Kansas City in the 2012 NFL Draft, Stephenson appeared in all 16 games in three of his first four seasons with the Chiefs, making 21 starts.