Ikeme, 32, joined Wolves as a 14-year-old and graduated to the club's first team just three years later.
After several spells on loan, the Super Eagles goalkeeper went on to establish himself as the undisputed first-choice started at the Molineux.
Having featured 191 times for the first team, his retirement comes as a bitter blow, as a popular member of the dressing room.
Ikeme came to the decision after consultation with medical experts following his 12-month battle with acute leukaemia.
Last month Ikeme announced on Twitter that he was in complete remission from the disease after ‘a tough year and intense chemotherapy’.
"Having been at the club since the age of 14, Carl is far more than just a player in our eyes - he is our brother and an important part of our family," executive chairman Jeff Shi told the club's website.
"When Carl came to tell us his news, yes there was sadness, but also great happiness to see him so healthy and hungry for the opportunities that lay ahead of him.
"Carl is strong, a fighter, something he has proven in his playing career and also during what has been a very challenging time for him, so I have no doubt he will be a success in whatever he does next.
"We wish Carl all the very best for the future, but remind him he will always remain a part of the Wolves family."
Nigeria honoured the towering stopper by naming him as the 24th member of their 2018 World Cup squad.