Hughes' half-million-dollar bonus kicks in if he reaches 210 innings this year, but he is set to finish with 209 2/3 after a rain delay forced him out of his final scheduled start Wednesday.
Manager Ron Gardenhire said Thursday the Twins were prepared to let Hughes pitch again before the end of the season.
"I just didn't think it was right," Hughes said before the team's 4-2 loss to Detroit. "If I were fighting for a playoff spot, I'd 100 percent be available. But given the circumstances, I don't think it's the right thing to do."
Hughes is 16-10 with a 3.52 ERA in his first season with Minnesota, which signed him to a three-year deal in the offseason. He spent seven seasons with the New York Yankees before that.
Hughes has already triggered a pair of $250,000 bonuses for reaching 180 and 195 innings this season, on top of his $8 million salary.
"I owe too much to this organization for the next two years to risk getting hurt for an incentive," Hughes said. "For whatever reason it wasn't meant to be. There's a lot bigger problems out there. I'm proud of my season."
Twins general manager Terry Ryan said he was impressed by Hughes' decision.
"He decided after a little thought, he just wasn't going to do it," Ryan said, according to the Minneapolis Star Tribune. "So I respect that. It is a decision that would be difficult to make if you're a player."
Hughes has 186 strikeouts and only 16 walks this season. His strikeout-to-walk ratio of 11.63 will be a major league record, breaking the mark of 11.00 set by Bret Saberhagen of the New York Mets in 1994.
If Hughes were to pitch again and walk one more hitter without a strikeout, he would fall short of that record.
Information from the Associated Press was used in this report.