"After been given the opportunity to take some time off and step away from the game, I've come to the decision that wasn't the easiest to make, yet I feel is the right one," Kieswetter, 27, said on Somerset's website.
"Having gone through that experience of my eye injury and everything it entailed, I feel mentally I will never again be the player that I was."
Kieswetter broke his nose and damaged his eye socket and cheekbone last July when a ball went through his protective grill while batting for Somerset against Northamptonshire.
He returned to action last September but realised his vision was still impaired.
South Africa-born Kieswetter made his first-class debut for Somerset in 2007 and was given clearance to play for England in 2010, going on to play 46 One-Day Internationals and 25 in the T20 format, keeping wicket and often opening the batting.
Kieswetter was also part of England's Twenty20 World Cup-winning squad in the West Indies.
Image: Craig Kieswetter
Photograph: Philip Brown/Files/Reuters