The former Manchester United and West Brom goalkeeper previously hung up his boots after leaving Watford.
However, he made a return to the game by signing for Wrexham towards the end of last season.
Foster helped them secure promotion to League Two and has made 12 appearances since signing, but has now called it quits.
His decision came after he conceded five in the 5-5 draw with Swindon on Saturday, making it 13 in just four league games this season.
In a statement on Wrexham’s website, he said: “The honest truth is that my performances this season haven’t reached the level I demand of myself and I feel that now is the right time to retire.
At the forefront of my mind when making this decision, was not only what was best for me but also the Club, and making the decision now gives the Club every opportunity to assess their options before the window closes.
“Wrexham will always have a special place in my heart.”
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