Hill, who turns 31 later this month, spent his first eight years with the New Orleans Saints before being released in a wave of salary-cap cuts. He initially planned to follow his former position coach, Dan Campbell, to Detroit before the apparent change of heart.
Hill's one-year deal with the Lions was scheduled to pay him $1.2 million.
"This game has blessed my family and I with more than we could have ever imagined," Hill wrote in an Instagram post. "Everything this game has given and taught me makes this decision extremely difficult, but I am looking forward to all of the years I have with my young family, and being able to chase after different dreams."
Hill joined the Saints as an undrafted rookie from Idaho State in 2013 and quickly earned a place as a versatile blocker, receiver, core special teams player and occasional fullback. The 6-foot-5, 250-pounder finished his career with 116 catches for 1,071 yards and 15 touchdowns in the regular season, plus another 15 catches for 166 yards and a TD in the playoffs.
Saints coach Sean Payton once described Hill as so valuable in so many different areas of the playbook that losing him to an injury early in a game was "like losing your front door."
"He has been a model of consistency throughout his eight seasons with us," Payton said in a statement when Hill was released. "He has been reliable, selfless and filled numerous roles for us, oftentimes on the fly and in the middle of games, filling each role at a very high level."