The 33-year-old, who starred in the Premier League for Wigan, Fulham and Hull City, has suffered two cruciate knee ligament injuries during his career.
And, after making just three appearances following his summer move to the Buckinghamshire side, he has decided to retire with immediate effect on the advice of a specialist.
"My old knee injury has never allowed me to get back to where I want to be as a football player," he told reporters.
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"I want to be out there playing but at the same time I know my knee won't allow me to play at my best and to keep my place in the team. I'm hindering myself more than I am helping myself for the future."
Bullard enjoyed a nomadic career, making his debut for Peterborough in 2001 before spells with Wigan, Fulham, Hull and Ipswich Town.
"In the summer I knew I wanted to give it one last crack and show people what I could do," he added.
"But what I think with my strong head and what I could physically do are two different things. My head tells me I can do it, but my body tells me, no Jim, you can't."
The former West Ham youth product had been called up to the England squad on four separate occasions but failed to earn an international cap.