A seven-year veteran, Barber, 28, played six seasons for the Dallas Cowboys before signing a two-year contract last August that included a signing bonus of $500,000 and base salaries of $2 million and $1.9 million for the 2011 and 2012 seasons, in addition to a $100,000 workout bonus.
"I want to thank everyone who gave me the opportunity to play, and I'm very thankful to have had the chance to suit up for two of the NFL's most storied organizations," Barber said to the team's official website. "I want to thank everyone who helped me become a better player. I owe a lot to a lot of coaches, and am also very grateful to the owners and organizations I played for. Last but not least, I want to thank the fans for the support and inspiration they gave me."
Barber's retirement came a day after the team announced it had agreed to terms with former Oakland Raiders running back Michael Bush, who signed a four-year contract worth $14 million, including $7 million guaranteed.
Bush replaces Barber as the club's No. 2 running back behind Matt Forte.
After missing the first three games last season because of a calf injury sustained in the preseason, Barber rushed for 422 yards and six touchdowns before missing the final two games with another calf injury. Barber brought a level of physicality to the position, which was apparent on the first day he was able to participate in practice at training camp in Bourbonnais, Ill.
Perhaps Barber's two most memorable moments of last season came as the result of a pair of gaffes that cost the Bears in a 13-10 overtime loss at Denver in Week 14. During the defeat, Barber -- with his team leading 10-3 just after the two-minute warning in regulation -- stepped out of bounds, which gave the Broncos time to tie the game with three seconds remaining by scoring 10 unanswered points.
In the overtime period, Barber lost a fumble that led to the Broncos taking possession and winning on a 51-yard field goal by Matt Prater.
Coincidentally, the loss at Denver marked Barber's lone 100-yard rushing performance of the season.
Barber put together his most productive season in 2006, when he led the NFL in rushing touchdowns with 14.. Barber made his only Pro Bowl during the 2007 season, rushing for 975 yards and 10 touchdowns.
Barber finishes his career with 4,780 rushing yards and 53 TDs, in addition to 1,330 receiving yards on 179 receptions.
Receiver Roy Williams, a former teammate of Barber's with the Cowboys and Bears said not to discount a potential comeback for the running back.
"Well, when you can't make the back flip all the way [around], it's time," Williams joked. "He had a great career, can still play, he's a friend and a person who loved the game. He'll probably come back Brett Favre style."
ESPNChicago.com's Jeff Dickerson contributed to this report.