Dawson, 44, played with the Browns from 1999 to 2012. He is the team's all-time leader in career field goals (305), highest career field goal percentage (84 percent), most field goals in a season (30 in 2008) and most consecutive field goals made (29), among other records.
Dawson is the only player in Browns' history to make the Pro Bowl as a kicker. Lou Groza, who made 57.8 percent of his field goals for the Browns from 1946 to 1967, made the game as an offensive tackle.
"To have the opportunity to come back home and retire with the organization and the city that I love is incredibly meaningful to me," Dawson said in a news release. "It only seems right to have the opportunity to do this with the fans that have been so good to me and my family."
Dawson is eighth in NFL history with 441 field goals made. He made five of his eight tries in 10 games with the Cardinals last year.
"We are thrilled that Phil Dawson wanted to come back and retire as a Cleveland Brown," said Browns owners Dee and Jimmy Haslam. "He epitomizes the characteristics that we look for in our players - hardworking, professional, consistent and he was a pillar in the community.
"He is a great example for all current and future Browns."