The 33-year-old former Queensland and Australian forward, who won grand finals with Melbourne and the Sydney Roosters, joined Souths in 2009 and will draw the curtain on a 13-year career after his knee failed to respond to surgery.
"After undergoing surgery in April, my focus has been to get back on the field," Crocker said.
"My goal was to captain South Sydney to a grand final win and to play again next season.
"It has been a challenging year and I have explored every possible option to get myself back playing.
"Unfortunately, I have arrived at the point where my knee is unable to meet the demands of professional football.
"Sadly this means I will be unable to play for the South Sydney Rabbitohs for the remainder of this season.
"It has been an incredible 13 years playing in the NRL and my career has been blessed.
"I am honoured to have played for my state and country and I am privileged to have experienced grand final success at both the Roosters and Melbourne Storm.
"I have played at three fantastic clubs, coached by arguably some of the best coaches of all time."
SNAPSHOT OF MICHAEL CROCKER'S NRL CAREER:
Born: June 21, 1980 in Sydney
Position: Utility forward
NRL debut: Round 6, March 2001 (Sydney Roosters)
NRL games: 204
Clubs: Sydney Roosters (2001-05); Melbourne (2006-08); South Sydney (2009-13)
First-grade tries: 32
Representative honours: 6 Tests for Australia (2003-08); 13 State of Origin matches for Queensland (2003-09); PM's XIII (2011)
Grand final appearances: 5 (2002-04, 2007-08)
Grand final victories: 2 (2002 - Roosters, 2007 - Melbourne)