The decision was made after Hamilton met with Washington and trainer Jamie Reed on Tuesday afternoon.
"I think it's smart," Hamilton said. "The best I can do is pinch-hit and even if I got on base, they would have to pinch-run for me. It's a good move. I've got to be honest with myself and do what's best for the team. After talking with Wash and Jamie, we decided this was the best course of action."
Hamilton's season comes to an end after just 89 games and 283 at-bats. He finished at .268 with 10 home runs and 54 RBIs after hitting .304 with 32 home runs and 130 RBIs in 156 games in 2008.
He was on the disabled list from April 27 to May 11 with a strained intercostal (rib area) muscle and again from June 1 to July 5 with a torn abdominal muscle that required surgery. His back started bothering him at the end of August, and he finally had to come out of the game on Sept. 2 against the Blue Jays. He played on Friday and Saturday as designated hitter against the Jays but did not recover well from that.
He was on the bench on Monday night when the Rangers lost to the Angels, 11-0, and were eliminated from the American League West race.
"Obviously it's hard not to think about what would have happened if I had been out there every day," Hamilton said. "If I had put up the numbers I did last year, would we have been playing in October. It's hard not to think about it.
"It's frustrating. But at the same time, there is nothing I can do about it. I'm going to do exactly what I did last offseason, come to Spring Training in the best shape I can and start over again."
Hamilton said he will not go into Spring Training thinking he has something to prove.
"People will think I have something to prove," Hamilton said. "I don't feel I have something to prove. I proved last year I could stay healthy. Baseball activities are all about running, throwing and hitting. This year was different. I made a couple of plays I needed to make, and I got hurt. If I have to make those plays next year, does that mean I'll slow up?
"That's not what that means."
The Rangers were without both Hamilton and Michael Young for much of September. Young returned to the lineup on Monday night after missing four weeks with a strained left hamstring muscle. He went 2-for-3 and was back in the lineup on Tuesday.
The Rangers went into Tuesday's game having scored 760 runs, seventh-most in the AL. They led the Major Leagues with 901 runs scored in 2008, when Hamilton was at his best.
"I've always said that last year for Josh Hamilton was a career year," Washington said. "I would have taken three-fourths of that. We certainly missed his production, especially with the lack of consistency with our offense. It made it worse when both he and Mike left us."