The team issued a statement Monday evening that the 35-year-old is announcing his retirement. The Grizzlies signed Williams on Feb. 7, after he was released by the Orlando Magic.
Williams missed the final 17 games of the season with lower back soreness.
The 6-foot-1 guard finished with career averages of 10.5 points and 5.9 assists. He is the Grizzlies' all-time leader in assists with 2,069.