"It's something that I have thought about for a while. I have played 10 years for the one province and it's a pretty hard place to leave but I've decided that's it's probably the right time for me to bow out now," he said.
Collins added that there were no overseas offers on the table at the moment and said his immediate priority, after playing for the Barbarians against England this weekend, was to return to New Zealand and look at his options.
"I'm not in any rush to get out the country. With me, I'd like to think that what you saw is what you got. I always tried to put as much as I could into every match.
"I wanted to leave at the right time and after thinking about things over the past week, and then getting through Saturday night's match, that time is now.
"I wanted to do it the right way with respect to the Hurricanes, the New Zealand Rugby Union and the Wellington Rugby Union.
"You can't negotiate while you're still contracted so at the moment the cupboard is pretty bare but I'm sure there's someone out there who will give me a job for a couple of weeks."
Collins' decision brings to an end a New Zealand Test career that began against Argentina in Christchurch in 2001 and ended in disappointment with last year's World Cup quarter-final loss to France in Cardiff.
He played 48 Test matches, including three as captain.
"I'd like to think that I didn't do the jersey any injustice when I took the field for the All Blacks. I put everything into it and put some of myself into it. I had my ups and downs but I enjoyed every minute of it.
"It's the highlight of every rugby player's career on this side of the world (to play for the All Blacks) whether you are born in New Zealand or whether you are an immigrant to the country and you play rugby in the country. It is the ultimate goal.
"That's probably the sad part, the passion that you feel for playing for the All Blacks, you're never going to feel it again."
All Blacks coach assistant coach Steve Hansen paid tribute to the contribution Collins, renowned for his fierce tackling and uncompromising style of play, had made to New Zealand rugby.
"Jerry has been a pleasure to coach. He's one of those players you can rely on to front up on game day. He was always focused on the task in hand and didn't get distracted by the occasion or the opposition," said Hansen.
"He has always been his own man and done things his own way, and that way has served the All Blacks well over the last seven years.
"He'll be missed by New Zealand rugby at all levels."
Since making his provincial debut for Wellington in 1999, Collins has been a loyal servant in the New Zealand capital, starting his Hurricanes career against the Queensland Reds in 2001 and becoming one of the most feared competitors in the game.
He played his final representative match on New Zealand soil last Saturday night, scoring the last points of the game when he converted replacement prop Neemia Tialata's late try in the Hurricanes' 33-22 Super 14 semi-final defeat to the Crusaders.