Higgins, 32, who joined the Falcons ahead of the 2012-13 campaign, has been advised by medical experts on the grounds of a knee injury.
Making 14 appearances for the club, the former Bath Rugby, Exeter Chiefs and Sale Sharks man played his role in helping the Falcons make an immediate return to the Aviva Premiership last term.
“It was a tough decision to have to make, and I’m ultimately disappointed to have retired from rugby,” said Higgins.
“I’ve really enjoyed my time at Newcastle Falcons and I would like to thank the club for their support throughout this period. I would also like to thank those individuals who helped me early on in my career,” added the former England Saxon.
Falcons director of rugby Dean Richards said: “I’m disappointed that Andy has had to retire. Andy has contributed a lot to the team during his year at the club, and I wish him all the very best for the future.”