The 33-year-old player left Anfield last month after four years because his contract was up.
Thiago was hampered by wounds last season and showed up for the Reds, who chose not to recharge his arrangement.
Fabrizio Romano says that the midfielder has decided to end his career rather than look for a new team.
Thiago has had a remarkable career, winning numerous titles with European powerhouses Liverpool, Bayern Munich, and Barcelona.
He began his career with the Catalan team, where he won the Champions League, four LaLiga titles, and the Copa del Rey.
After that, Thiago moved to Bayern in 2013 and went on to win seven Bundesliga titles in Germany.
The Spanish midfielder helped Bayern win the Champions League in 2020 before signing a £20 million deal with Liverpool shortly thereafter.
Wounds were a consistent issue for Thiago during his time in Merseyside however he showed his quality when injury free.
He made 97 appearances in his first three seasons at Liverpool, helping the team win the FA Cup in 2021-2022.
Nonetheless, he oversaw only four minutes last term because of a hip and muscle wounds and was given a profound goodbye close by Jurgen Klopp and Joel Matip.
Talking toward the finish of the time, Klopp said: ' Before he even arrived at Liverpool, I was of the opinion that if you truly enjoy football, watching Thiago Alcantara play would make a lot of sense.
"Technically, he is so excellent." A talent who could play for any team in the world, and having him with us was a privilege.
"I already knew a lot about him as a footballer before he came here, like what he did at Barcelona and Bayern Munich, so how could you not?," she said. and when he decided to take on a new challenge with us, I couldn't have been happier.
'Starting there on I got to see him very close and well then, most certainly 'Amazing'. Most importantly, because of his unique qualities, he was a part of a new story and helped us grow as a team.
"I know that injuries have been frustrating for both him and us, but the level at which he was able to play when he was available was amazing." I'll always remember this.'