The former Scotland, Chelsea and Motherwell defender was told at the end of the season by The Bhoys that he would not be offered a new deal.
That sparked speculation he would join another Scottish club in a player-coach role, and both Motherwell and Falkirk sounded him out about a move.
However, the 37-year-old has decided against playing on, and is now to concentrate on a career in coaching.
"Tom had a couple of offers to continue in a playing-coaching position," said his agent, Blair Morgan.
"But he just felt he couldn't perform at the same high level as he has done for several years at Celtic.
"Rather than short-change himself and any club he has decided that it's time to call it a day and retire from professional football.
"He just feels he cannot play at the standard he would want to, but he definitely wants to stay in the game.
"He has gone away with his family and when he returns he is obviously hoping to be able to find a role in a coaching capacity in Scotland. We will see what offers are available when he comes back."
