The news comes hot on the heels of the announcement that Ireland and Munster back row Denis Leamy is also being forced to hang up his boots due to a hip injury.
Hurley turned out for Ireland A in February 2008 against Scotland and Munster CEO Garrett Fitzgerald admits his retirement is a sad day for the province.
"It is really disappointing to see a young player of such promise have to make this decision," said Hurley.
"Darragh worked extremely hard to try and overcome his injury difficulties but unfortunately for him and for Munster Rugby, medical advice decided the outcome.
"He was an extremely popular and talented squad member who we wish all the very best to in whatever career he chooses to pursue."
Having come through the UCC and Cork Constitution club system Hurley won international caps at school and Under-21 level before making his Munster debut at the Arms Park against Cardiff in September 2006.
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