The 35-year-old Norwegian has decided to call it a day and cancelled his contract with his boyhood club that he returned to only three months ago, Aalesund.
Riise joined Liverpool from Monaco in 2001 for £4m and made 234 appearances, scoring 21 goals for the Reds and helping them to Champinos League victory in 2005.
He then moved on to play for Roma before making a brief return to the Premier League with Fulham.