The team released Carson with a failed physical designation on Tuesday.
"Ever since the first time I saw Chris on film, I loved his style, and I was thrilled when we were able to get him when we did," Seahawks coach Pete Carroll said in a statement Tuesday. "To see him grow and become such an impacting part of our program with such a great style and all of that, it was a thrill to watch. We'll miss him and everything he brought to our program."
Seahawks general manager John Schneider added: "He's been an incredible pro, a guy who brings an amazing energy about him. His running style is what we've always wanted here in Seattle. He's the type of runner that the whole team feeds off of. The type of player defensive players get off the bench to watch him run --they can feel his energy. He's the type of runner whose style affects the whole team, not just the offense.
"It's a big disappointment. We took it as long as we possibly could with him, he saw a number of specialists, but unfortunately he wasn't able to pass our physical."
Carson's retirement is a blow to Seattle's backfield but not a surprising outcome given the uncertainty with his football future. Multiple Seahawks sources have expressed doubt in recent months that he'd be medically cleared after having what Carroll described as fusion surgery in December.
NFL Network first reported Carson's plans to retire.
Carson appeared in the first four games of last season and was unable to return because of his neck injury. Carroll said last month that Carson still didn't have full range of motion and had yet to be medically cleared. He said Carson was "concerned" about his playing future.
Carson, 27, rose from a seventh-round pick out of Oklahoma State in 2017 to one of the league's most physical runners when healthy. He began all five of his NFL seasons as Seattle's starter, beating out free agent signing Eddie Lacy as a rookie and then Penny, Seattle's first-round pick the following year. He topped 1,100 yards in 2018 (14 games) and 2019 (15 games), the two healthiest seasons of what has otherwise been an injury-marred career. In doing so, he became the Seahawks' first back since Marshawn Lynch in 2013-14 to post consecutive seasons with at least 1,000 rushing yards.
For his career, Carson has rushed for 3,502 yards and 24 touchdowns on 769 attempts (4.6-yard average) in 49 games. Spotrac.com lists him with $9.5 million in gross on-field earnings to this point.
Penny, who led the NFL in rushing over the final five weeks of last season, is in line to be Seattle's primary running back after returning on a one-year, $5.75 million contract. He's missed 30 of a possible 69 career games (including playoffs) due to injury. That, combined with Carson's uncertain future, was why the Seahawks reinforced their backfield by drafting Walker 41st overall.
In addition to Carson, the Seahawks also waived linebacker Ben Burr-Kirven with a failed physical designation on Tuesday. They put four players on the physically unable to perform list to begin training camp: cornerback Tre Brown, inside linebacker Jon Rhattigan, outside linebacker Tyreke Smith and offensive tackle Liam Ryan.
ESPN's Jeremy Fowler contributed to this report.