Warburton, the former Wales captain and two-time British and Irish Lions skipper, has quit rugby’s professional arena at the age of 29.
His decision – 14 months before Wales’ World Cup campaign begins in Japan – comes after he underwent neck and knee operations last year.
Flanker Warburton, who led the Lions on tours to Australia in 2013 and New Zealand last summer, had not played since the drawn third All Blacks Test 12 months ago.
And Gatland, who appointed Warburton as Wales skipper in 2011 and to lead both Lions tours that the New Zealander was head coach of, paid him a glowing tribute.
“He is an outstanding rugby player and he has brought so much to the game, on and off the pitch,” Gatland said.
“His leadership, attitude and demeanour, along with his performances, have placed Sam up there as one of the best and most respected players in the world. He finishes with a record that he should be extremely proud of and he should look back on his career with huge pride.”
Warburton’s announcement was released jointly by the Welsh Rugby Union and his regional team, Cardiff Blues.
He said: “Unfortunately, after a long period of rest and rehabilitation, the decision to retire from rugby has been made with my health and well-being as a priority as my body is unable to give me back what I had hoped for on my return to training.”
Warburton won 74 Wales caps and captained his country a record 49 times.
Although injuries hit hard during his career, they did not prevent him establishing a reputation among the world’s best openside flankers, with fearless, critical work at the breakdown area proving his major strength.
He returned to training with the Blues this summer after missing the whole of last season, but has now made the decision to call it a day.
The WRU and Blues statement read: “Since returning to pre-season with Cardiff Blues, it has become clear to Warburton that he wouldn’t be able to return to the high standards he has set throughout his career and has reluctantly made the decision to retire.”
Warburton added: “I cannot thank the Welsh Rugby Union and Cardiff Blues enough, who have gone beyond the call of duty in providing the support I received to help me get back on the field, for which I will be forever grateful.
“Since I first played aged 10 at Llanishen Fach Primary School, then Whitchurch High School and Rhiwbina Juniors RFC, I always dreamed of playing for my hometown club the Cardiff Blues, Wales and the British and Irish Lions.
“To look back on my career, I am extremely proud of what I managed to achieve.
“There are so many people who helped me along the way from schoolteachers, coaches, friends and family.
“I would like the make special mention of Warren Gatland. Without the faith he had in me and his unwavering support, I would never have had the career I was able to pursue.”
Warburton emulated England World Cup-winning skipper Martin Johnson in captaining the Lions on two separate tours, and he never lost a Test series, overcoming Australia 2-1 and then drawing last year’s series against reigning world champions New Zealand.
He also steered Wales to the 2011 World Cup semi-finals – he was controversially sent off in the last-four clash against France – and although Warburton leaves a considerable void in the Wales camp, Gatland can be consoled by an array of openside talent available to him offered by players like Justin Tipuric, James Davies, Josh Navidi and Ellis Jenkins.