Trainer Ed Dunlop was preparing the six-year-old mare for a return to the track when the problem was discovered on Tuesday.
"It is with much sadness that a decision was made this morning to retire Snow Fairy," the Newmarket handler said .
"She was found to have re-injured her near fore tendon."
Snow Fairy won six Group One races in a decorated career and took in just under £4 million in prize money.
Her last victory was at the Irish Champion Stakes last September, held at Leopardstown.
She will now head to Ireland for broodmare duties and will be covered next year by owner Cristina Patino’s stallion Elusive Pimpernel.
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