Watson moved to Leicester from Premiership rivals Bath in 2022 and managed just 23 appearances for the East Midlands club during the injury-plagued latter years of his career.
Leicester described the winger as “one of the most electrifying rugby talents of his generation” as well as “one of English rugby’s modern greats”.
Watson, who spent nine years with Bath after first coming through at London Irish, last featured for the national side in the summer of 2023.
England head coach Steve Borthwick, who Watson also played under at Tigers, said the player “is to be congratulated on a fantastically successful career”.
“He is a humble, hard-working professional man who is universally liked and admired in the game,” Borthwick said.
“Anthony not only brought his incredible talent to the England shirt every time he played, but he was also a player who was immensely proud to represent his country.”
