Yorkshire released Ballance from his contract in December after the Zimbabwe-born player spent a year on the sidelines to deal with mental health issues.
Ballance admitted in 2021 to using racist language against former team-mate Rafiq, whose allegations of institutional racism at Yorkshire rocked English cricket. He also apologised in person to Rafiq.
Ballance signed a two-year deal to play for Zimbabwe last year.
"After much thought, I have decided to retire from all forms of professional cricket with immediate effect," Ballance said in a statement released by the Professional Cricketers' Association.
"I had hoped my move to Zimbabwe would provide me with a new-found happiness for the game and I will always be thankful to Zimbabwe Cricket for providing me with an opportunity to return to international cricket and welcoming me into their team.
"However, I have reached the stage where I no longer have the desire to dedicate myself to the rigours of professional sport and this would do Zimbabwe Cricket and the game itself a disservice, should I carry on."
Ballance's final test appearance for Zimbabwe was against West Indies in February.
