Jones, 30, started his career at local side Bangor City and went on to play for clubs including Swansea, Swindon, Norwich and Hibernian.
He won seven Wales caps after his debut against Luxembourg in March, 2008.
"I have been advised by the knee specialist that it is in my best interests to retire from football due to a knee injury," Jones said.
"I would like to go on record to thank Falkirk FC, in particular [director] Ronnie Bateman, [manager] Peter Houston and club physio Kris Robertson for all of their help during this time and I wish them the very best as they chase a play-off spot and Scottish Cup success."
Falkirk said they are "saddened" by Jones' retirement and wished him well for the future.
Jones' other clubs include Yeovil Town, Brentford and Inverness Caledonian Thistle, who gave the midfielder his first taste of Scottish football when they signed him in July 2011.
He moved to Hibernian in 2013 and was snapped up on a free the following year by Falkirk, but unfortunately his injury problems limited him to five appearances for the Scottish Championship side.
Wales and Falkirk midfielder Owain Tudur Jones has retired from football because of ongoing knee problems.