Kay was a Test Lion in New Zealand five years ago, featuring in the first international against the All Blacks in Christchurch.
The Leicester Tigers veteran won a total of 62 caps for his country and picked up Guinness Premiership, Heineken Cup and Anglo-Welsh honours during his 11 years at Welford Road.
He retired from international rugby last summer and it had been announced earlier this season that he was considering his future having not been offered a new contract with the Tigers.
That decision has now been finalised, with Kay turning down offers to carry on playing to instead embark on a career in the media.
"These days rugby is a business and making the right decision at the right time is why Leicester have been so successful at it," said Kay, who joins Nick Mullins and fellow Lion Austin Healy as ESPN's co-commentators for next season's Guinness Premiership.
"I had one or two other options but really I was only keeping things open while ESPN confirmed this deal.
"I'm delighted to be joining ESPN at such an exciting time for the broadcaster as it prepares to be the lead UK TV broadcaster of Premiership Rugby.
"ESPN has a great reputation for producing top-quality rugby programming around the world, and I hope that I can add to that reputation.
"I could have gone on playing, but after 20 minutes of the England-Barbarians match at Twickenham a few weeks ago, this was starting to look a better and better option."