Frings, who won 79 caps for Germany and played in two World Cups including a run to the 2002 final, spent one and a half seasons with Toronto after a distinguished career in the German Bundesliga with Bayern Munich, Werder Bremen and Borussia Dortmund.
The 36-year-old midfielder was the team's highest paid player, earning a reported $2.43 million, but his playing time with the Major League Soccer club was cut short by injuries.
"During pre-season we discovered that my recovery would take longer than expected," Frings said in statement. "I always want to do what's best for the team and that is why I have decided to step away."
Frings made one brief pre-season appearance before leaving their training camp and returning home.
"Everyone is sorry that Torsten will be unable to lead our team this year but the injury he had often requires a lengthy period of rehab, and that is the case here," general manager Kevin Payne said.
"We appreciate Torsten's commitment to Toronto FC and are pleased he has agreed to work with us, particularly in Europe, on future projects."