Dyer, who has 33 England caps, began his career at home town club Ipswich before making a big money move to Newcastle in 1999.
Dyer made nine appearances and scored two goals for Middlesbrough last season.
The 34-year-old confirmed: “I’m done now, I’m content and that’s it. I don’t want to move away any more, I just want to spend quality time with my kids.
“Since I went up to Newcastle, I’ve been all over the country and I haven’t really had too much quality time with my kids and now I feel that it’s the perfect time.”