The veteran forward, who made over 100 appearances for his country and scored for Croatia at the 2002 and 2014 World Cups, hangs up his boots at the age of 37.
Olic began his career at Croatian club Marsonia before going on to win a trio of Russian Premier League titles and the 2005 UEFA Cup with CSKA Moscow.
He spent most of his career playing in the Bundesliga, though, and secured a move to Bayern in 2009 after starring for Hamburg.
At Bayern, Olic won a league and DFB-Pokal double in his maiden campaign and was twice a runner-up in the Champions League.
Olic left Bayern for Wolfsburg in 2012, while he also had a second spell with Hamburg before playing for 1860 Munich – who were relegated to the third tier last season.
"I'm ready to hang up my boots," Olic told German newspaper Bild. "I think I can leave football with a clear conscience.
"I am happy, having fun with myself, I had a lot of success and I can say that I gave everything in training and matches. For me it was a dream to play at a high level for so long.
"I'm sorry to go when the club were relegated to the third division. I love this traditional club, but in it there have been problems for a long time."