The 39-year-old outfielder signed a minor league contract with Washington in December, and was expected to have a good shot to make the roster with the Nationals unsettled at center field.
The Nationals made the announcement Sunday, though, six days before position players were to report to spring training.
The 2001 All-Star played for eight franchises, hitting .249 with 278 homers and 968 RBIs. Last year, Cameron hit .203 in 78 games split between Boston and Florida.
Jayson Werth could start the season in center field, making room for 19-year-old phenom Bryce Harper in right field if he makes the team.
With Cameron's retirement, Roger Bernadina and Rick Ankiel will likely be the top center field options beyond Werth, and could platoon there if Harper starts the season in the minors.