O'Leary won the Six Nations Grand Slam in 2009 with Ireland and the Heineken Cup twice during his first spell with Munster.
The 33-year-old, who was selected by the British & Irish Lions in 2009 but missed the tour of South Africa due to injury, spent last season with French outfit Montpellier and has now confirmed he has decided to call time on his career.
"I have had an incredible career, from my academy days in Munster to my last game in Montpellier, all of which have been extremely satisfying. I have realized my ambition of representing Munster and Ireland. Wearing the red and green jerseys has been a real honour," he said in a statement.
"Highlights that stand out are the two Heineken Cup victories with Munster and winning the Grand Slam in 2009 with Ireland. However, the most fulfilling experience is the unique bond and friendships I experienced through rugby. This camaraderie is what I will miss the most. For this, I would like to thank all of the team-mates I have had the pleasure of playing with throughout my career."