The Tigers said the decision was made following consultation with the club’s medical team and concussion experts.
Back-row forward Denton, 29, was hurt during Leicester’s victory over Northampton at Twickenham in early October and has not played since.
Leicester head coach Geordan Murphy told the club’s official website: “His health is paramount, and we are not in the business of risking players’ well-being. Ultimately, the decision was taken out of his hands by experts.
“He is disappointed to not be out there with the lads, but understands the importance of the situation and his long-term health.
“He will continue to work with our medical staff, alongside strength and conditioning coaches, towards a return for next season for the club.”
Denton, who joined Leicester from Worcester last summer and has won 42 Test caps, added: “It has been a difficult season and one I wish I could have played a bigger role in alongside the rest of the squad.
“It has been a frustrating period for me on the sidelines, but this decision allows me some clarity, which is nice, and I can aim towards getting back to full fitness to make a big impact next season.
“Concussion is a serious thing, and I am very appreciative to the medical staff at the club and experts I’ve consulted for their care and understanding throughout the season.”