The 34-year-old former Bears captain spent his entire career at Edgbaston, making 159 first-class appearances and scoring more than 8,000 runs.
He twice won the County Championship with the Bears, in 2004 and 2012, captaining the side in 2009 and 2010.
However, he has only played in four Championship matches this season and has now retired with immediate effect.
"Playing for my home county was all that I ever wanted to do as a junior," he said. "I am very proud to have enjoyed a 15-year career, in which I have been part of teams that have won the County Championship and also captained the club.
"It has been a very difficult decision to retire, but this is the right time. I would like to thank the many people that have supported me throughout, particularly the players and coaches who I have worked with, club members and of course my family.
"I'm now going to enjoy a period with my family, but certainly intend to remain in cricket and will be a regular visitor to Edgbaston to catch up with the lads and support the Bears."
Westwood began planning for a possible future career as an umpire last summer when he started officiating in Birmingham League matches.
Warwickshire batsman Ian Westwood has announced his retirement from cricket after a 15-year playing career.