The 37-year-old striker made 285 appearances for Brighton, scoring 111 goals, making him second in the club’s all-time goalscorers list.
Murray enjoyed two promotions with the Albion – from League One in 2011, and from the Championship in 2017.
His decision comes having spent the last six months at Championship side Nottingham Forest, working under former Seagulls boss Chris Hughton.
“I feel as though the time is right and I wanted to retire at a good level,” Murray said. “I’ve had a lot of good years in the game, but this seems the right time to call it a day.