The eight-time Pro Bowl player announced his retirement on his Twitter account Wednesday.
In a statement, he said, "After spending a lot of time this spring thinking about my NFL future, I have made a decision to retire."
"Although I could continue playing, I'm not sure I would bring a level of performance or passion that's up to my standards," he said. "When considering this, along with the fact that I could retire after a 13-year career wearing only one jersey for such a storied franchise, my decision became pretty clear."
Urlacher was the face of the Bears' franchise and leaves as one of the game's great linebackers. In March, he and the Bears were unable to reach a contract agreement and he became a free agent.
He started 180 games from 2000 through 2012, and recorded a team-record 1,779 tackles. He has 41½ sacks, 22 interceptions, 16 fumble recoveries and 11 forced fumbles. He was the AP's defensive player of the year in 2005 and helped the 2006 team to the Super Bowl.
Last year, he was slowed by a knee problem and then missed the final four games with a hamstring injury.
He had posted pictures on Twitter indicating he was working his way back into shape before the split with the Bears, but when they announced he would not be back, it was hardly a surprise.
Urlacher told the team's flagship radio station at the time that he was not shocked and that the offer he received was "more like an ultimatum" in which they were telling him, "Sign this contract or we are going to move on."
A safety with lightning speed, the 6-foot-4 Urlacher initially lined up at strong side linebacker for the Bears but lost the job to Roosevelt Colvin. He made the switch to middle linebacker during his first season when Barry Minter was injured and went on to become the NFL's defensive rookie of the year, the start of a long run that saw him anchor a defense that consistently ranked among the league's best.
But he clearly wasn't his old explosive self last year. The speed and quickness that allowed him to wreak havoc for years simply wasn't there.
Urlacher sprained his medial collateral ligament and partially sprained the posterior cruciate ligament in his left knee during the 2011 regular-season finale against Minnesota and hasn't been the same since then.
He barely participated in training camp, had an arthroscopic procedure in mid-August to relieve the swelling, and spent most of the season trying to regain his old form.
Then he came up lame in coverage on the second-to-last snap of the Bears' overtime loss to Seattle in early December, an injury that ended his season and, ultimately, his career.