Paul Nicholls's charge, who made jumping history by winning a fifth King George VI Chase at Kempton last December, was pulled up on his last outing in March when he was chasing a third Cheltenham Gold Cup victory.
"After seeing him in his work these past few weeks, myself, Clifford (Baker, head lad) and Dan (Skelton, assistant trainer) were of the opinion that the time had arrived to retire him," Nicholls said of the 12-year-old.
"Don't get me wrong, Kauto looks and feels as vibrant as ever, as those who saw him at our owners' open day last month would testify to. He was mad fresh that day and continues to be as alert as ever and very, very well in himself.
"But I suspect Kauto will be like that when he is 20-years-old.
"Kauto is signing off in full health and after a season in which he proved so many people wrong by winning a fifth King George and a fourth Betfair Chase, to add to his two Cheltenham Gold Cups and Tingle Creeks."
Kauto Star retires after outstripping the great Desert Orchid, four times a winner of the jump season's winter highlight, with his King George win on Boxing Day - one of 16 Grade One wins since a triumphant debut at Newbury in 2004.