Ibanez was initially concussed in a club match against Worcester Warriors in September of last year and has since suffered similar injuries against Leinster and Sale.
The announcement comes on Ibanez's 36th birthday, a few days after the Frenchman was reassessed by the Wasps neurosurgeon and neurologist following a two-month recommended break from the game.
Although Ibanez had attempted to ease his way back into training, the symptoms remained and he has been advised that playing again could pose a serious risk to his health.
Ibanez joined Wasps in 2005 and played 67 games from the club, winning the Powergen Cup, the Heineken Cup and the Guinness Premiership.
The Dax-born hooker skippered France to the Rugby World Cup Final in 1999 and has made more World Cup appearances than any other Frenchman with a total of 16.
Ibanez won 98 caps for his country, making his debut back in 1998 and last representing France in the third-place play off at the 2007 World Cup.
He will continue his involvement with Wasps, working with the coaches and players this season throughout the rest of the season.