The winger from the Amman Valley won 87 caps in a 14 year professional career during which he also scored 58 international tries.
The 35-year-old Osprey last played at the Millennium Stadium two weeks ago for the Barbarians against Wales.
He has announced that he is to continue his playing career with the Japanese team Mitsubishi Dynaboars on a one year deal.
Williams said: “I am very proud of everything I have achieved in rugby, but this is different because it is for the other things I have done over the years as well such as charity work.
“It is the perfect ending to years of rugby and everything else that I have done. It is very humbling to be honoured.”
