Barker, 34, has hung up his boots after losing his battle to recover from the injury which sidelined him for the final five months of last season.
The Sheffield-born striker rejoined Rotherham in October and scored 18 goals in 170 games over two spells for the Millers.
Barker also played for Doncaster, Ards, Linfield, Brighton, Macclesfield, Mansfield and Hartlepool in a 14-year playing career.
Paul Douglas, Rotherham's chief operating officer, told the club's website: "Richie had a very rare knee condition. He had a medical when he arrived and he passed it but his complaint was very unusual. It was a wear and tear injury around the knee joint and it manifested itself very quickly in terms of damage.
"The surgeon advised him that he risked permanent damage if he tried to get back to the level of fitness required of a professional footballer so, with regret, Richie has had to call it a day. It's a shame and as a club we would like to say how disappointed we are. Richie gave years of good service to Rotherham United and was a good professional."