Grygera, who joined Fulham in 2011, did not have his contract renewed at the end of the season after rupturing his anterior cruciate ligament.
The 32-year-old, who has earned 65 international caps for the Czech Republic, continued his rehabilitation in the hope of earning a new deal but has now called time on his playing career.
"Grygera told me that he will quit," said Jol.
"He will stay with us until the December 15. He is retiring as it is now as he first wants to be healthy, sound and get back to his fitness because he has a few problems with his hip and knee.
"He was probably never 100%, not even 90%, but he is an unbelievable character.
"He started two weeks ago then after 10 minutes had to quit so he made the decision to call it a day for now.
"If he feels fine in the summer, maybe he could start somewhere in Austria or in his country, the Czech Republic.
"It is a shame and it was hard for him, but he was very realistic and of course he was not under contract here because he never played games.
"I feel for him because I think there was another two or three years in him but it was his decision.
"He's retiring from Fulham and England. He wants to be fit and not end up in a wheelchair. That is actually what he said and I know what he means."
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