The Falcons say the 32-year-old Tongan was advised to call time on his career by medical experts due to a knee injury.
He is in his second spell with Newcastle, having initially joined them in 2008 from the Wellington-based Hurricanes, and then returning to Tyneside last year following a stint with Japanese club Yamaha Jubilo.
"It is a painfully tough decision for me to stop doing something that I've always loved since I was a young lad growing up in Tonga," Tu'ipulotu said, in a statement released by the Falcons.
Newcastle rugby director Dean Richards added: "I am disappointed and it's a big blow to the team to lose someone of Tane's calibre.
"Players of Tane's quality don't come around very often, and it's a massive loss to the side. We wish him all the very best for the future."