The Englishman failed to qualify for this year's world championship in Sheffield, England.
"I told (World Snooker chairman) Barry Hearn it was time to call it a day. My father passed away recently and it was a natural time to stop playing," Davis told the BBC.
"I should have done it ages ago, I played a bit for my father. I am delighted to have such a great time in the game, I was lucky to have a hobby as my profession."
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Davis dominated the sport in the 1980s, winning the world championship at the Crucible Theatre six times during the decade.
He collected 28 ranking titles, joint second on the all-time list behind Scotland's Stephen Hendry, and made a surprise run to the world championship quarter-finals in 2010 at the age of 52.
Davis also played in the most memorable world championship final, losing 18-17 to Dennis Taylor on the final black in 1985, and he compiled the first televised maximum 147 break in 1982.
"It has been a fantastic," Davis said.
"The game will move on to other places but I feel like the grandfather of the sport."
(Reporting by Ed Osmond, editing by Alan Baldwin)
