The 37-year-old slow left-armer, who has been playing for the Knights this season, played 15 Tests, 79 one-day internationals and 21 Twenty20s for his country and last featured two years ago.
“It is with mixed emotions and fond memories that I would like to announce my retirement from professional cricket,” said Peterson, who had stints in county cricket with Derbyshire and Surrey.
“It’s been an incredible journey with so many people that have supported and encouraged me along the way. First and foremost I’d like to thank all my team-mates for all the special memories they’ve helped create along the way, as well as all the coaches that have played a role in my development and as mentors throughout my career.”
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