Spaniard Michu top scored for the Swans with 22 goals in his first season after a £2m move from Rayo Vallecano in 2012.
However, within two years of helping Swansea finish ninth in the Premier League, he was playing fourth-flight football in Spain after a recurring ankle injury.
Michu spent the 2016-17 season with Oviedo and plans to move into coaching.
"The current state of Michu's right ankle makes it very difficult for him to take part in any sport," said a spokesman for the player.
"He now finds it impossible to continue his profession as a footballer. After seeking medical advice, he has decided to abandon the sport. He will instead pursue a career in coaching football."
After starting his career with Oviedo, Michu played for Celta Vigo before joining Rayo Vallecano, and was capped once by Spain in 2013.
Signed by Swansea for just £2m, Michu went on to become arguably the biggest bargain in the Premier League as he made a major contribution to Swansea's historic 2012-13 season.
He scored twice in the Swans' opening day 5-0 win over QPR at Loftus Road - manager Michael Laudrup's first Premier League game in charge of the Swans.
Among the memorable strikes were two late goals in a 2-0 away win over Arsenal in December 2012, and a trademark cool finish in a 2-0 win at Chelsea in the first leg of the League Cup semi-final.
Michu also scored as the Swans crushed Bradford 5-0 in the final at Wembley to claim their first major English football trophy.
He ended the season with 22 goals as Swansea finished ninth. He was valued at £30m by the club, who had given the player an extended contract in January 2013.
At the start of the 2013-14 season, Michu made his debut for Spain as a replacement in a 2-1 win over Belarus.
However, the ankle injury which was to blight the remainder of his career meant his second season in south Wales failed to live up to expectations.
Early season highlights, like a goal in the 3-0 away win over Valencia in the Europa League, gave way to frustration as he struggled for first-team appearances.
Michu played only five times after Christmas 2013 and finished a season in which manager Laudrup departed and was replaced by Garry Monk with six goals in 25 matches.
The 1-0 defeat by Hull on 5 April 2014 turned out to be Michu's last game for the Swans.
In the summer of 2014 he joined Serie A side Napoli on a season-long loan - but played only six times.
He was released by Swansea in November 2015 and spent a season playing fourth-tier football for Langreo in Spain, before agreeing a one-year deal with Oviedo for 2016-17.
Michu made 27 appearances in the 2016-17 last season, but scored just once.

Chris Kenny, the county's director of public health, warned that a batch of the drug being circulated was three times stronger than normal.
He said the six who died were part of a drug rehabilitation programme.
Potential users as well as hospitals, pharmacies and GPs have all been alerted about the risk.
Mr Kenny said all of those who died within the past week had been on the "road to recovery" as part of the Crime Reduction Initiatives (CRI) programme.
He said: "We're aware there's some heroin circulating in the community that's two or three times the purity.
"What's happened is [CRI] service users have obviously been taking this and have inadvertently taken a level that is dangerous to them and in six cases they have died.
"We're treating it as a public health emergency."
Mr Kenny confirmed that Nottinghamshire Police was investigating the deaths and the CRI has begun an internal inquiry.
Drug users, their friends and families, can call a 24-hour hotline on 0115 896 0798 for advice about the drug.
Michu, the forward who helped Swansea win the League Cup in 2013, has been forced to retire at the age of 31.
[NEXT_CONCEPT]
A "public health emergency" has been declared in Nottinghamshire after six people died in the county within a week after taking unusually pure heroin.