Propper, who won 19 Holland caps, returned to PSV Eindhoven last summer after a four-year spell with Brighton during which he made 121 appearances for the Sussex club.
He says he "lost the love for the game" in the time away from his homeland and that when he returned he "hoped to rediscover the joy...but it was not to be."
In a statement on PSV's official website on Tuesday, Propper said: "I made the final decision to call time on my playing career before Christmas and it feels like a relief. That's why I know I've made the right choice.
"When I was abroad, I gradually lost the love for the game. It was difficult for me to observe the discipline needed to perform at my best and have my life ruled by a hectic football schedule. And the coronavirus crisis and the lack of visits from relatives and friends haven't done me any good, either.
"I'm grateful the club (PSV) has made me feel welcome. I had hoped to rediscover the joy in playing football but it was not to be, as I don't feel comfortable in the world of football. I don't want to be part of it any longer."
Propper added: "I will take time to discover what my interests are and what I will take up.
"Of course I had my fair share of beautiful moments which I will cherish. We will see whether I will miss football but I'm ready to focus on new things. I want to thank my family, relatives and friends for all the support they've given me. Now the time has come to invest in them."
PSV said Propper's contract with them, which had one-and-a-half years left to run, had been terminated by mutual agreement.
PSV director of football John de Jong said: "We had obviously hoped Davy would play his part in achieving successes with PSV, but I appreciate his honesty, to himself and to the club.
"PSV are grateful for what he has done for the club in all those years, and for winning the Eredivisie title with PSV in 2016."
Propper began his career with Vitesse and then had two years with PSV before signing for Brighton in 2017 for what was an undisclosed club-record fee.
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