The Lakers bought out Divac's contract for $2 million. The 37-year-old center had back surgery in January and played in 15 games last season, averaging 2.3 points and 2.1 rebounds.
"I didn't have fun anymore with the injury I had," he said. "If I didn't have fun, I wouldn't play my best."
The Lakers could have picked up a one-year, $5.4 million option on the 7-foot-1, 260-pounder or put him on waivers.
Divac said he had seriously considered playing this season, "but I couldn't find the ride that would take me there."
He had career averages of 11.9 points and 8.3 rebounds in 15 previous seasons -- seven with the Lakers, two with Charlotte and six with Sacramento.
"I'm happy today," said Divac, who sat next to his wife, Ana. "When I look back, it was a wonderful career. It was a great ride for me."
He joined centers Kareem Abdul-Jabbar and Hakeem Olajuwon as the only players in NBA history to get 13,000 points, 9,000 rebounds, 3,000 assists and 1,500 blocked shots.
Divac was one of the first Europeans to have a major impact in the NBA. He was drafted by the Lakers in 1989, after playing in the former Yugoslavia's top league for five years.
Asked the difference between his life then and now, Divac joked, "I don't drive Yugo anymore, I drive Porsche."
He helped Yugoslavia to silver medals at the 1988 and 1996 Olympics and led the country now known as Serbia-Montenegro to a gold medal at the 2002 world championships.
"We tried to open the door for other guys," he said. "When I came in the NBA, it was more a U.S. game. Now you can watch the NBA anywhere in the world."
In his new job, Divac will report directly to general manager Mitch Kupchak, who plans to use him to evaluate European talent, scout on the West Coast and participate in pre-draft meetings.
"He brings a lot to the organization that benefits him and us," Kupchak said. "It's not a far-fetched concept that Vlade could be a front office person or even a coach someday."
Divac and his wife have two sons, ages 14 and 11, and a 7-year-old daughter.
"I never thought this day was going to come so quickly," he said. "I'm sure my life after basketball is, hopefully, going to be even better."