Suppiah, a top order batsman whose occasional spin earned him world record Twenty20 figures of six for five in 2011, has been suffering from problems in both knees.
"I am devastated to have to retire from the game that I have always loved," said Suppiah.
"This is the hardest decision of my life especially having played for Somerset for so long. After consultation with the specialist, I realise I have no choice but to retire.
"I have so many happy memories of my time at Somerset and would like to thank everybody from players, staff and members who have supported me during my playing career at the county. Somerset will always be my county and from the other side of the boundary ropes I shall continue to support the lads in every way I can."
Born in Malaysia but a cricketing product of the renowned Millfield School, Suppiah made his Somerset debut in 2002 and went on to play 100 first-class fixtures.
He also featured in 94 List A matches and 82 T20 games.
Somerset chief executive Guy Lavender said: "Arul might not have been born in the county but he is thought of as a real local. He has given so much to cricket in Somerset and it is a great shame that he has to retire in these circumstances.
"Not only is he an exceptional cricketer, he is a superb chap and I am certain that the next phase of his career will be as successful as the first."
- Sports & Recreation