Following a severe eye injury in January 2010, he played four times last season and scored a try in his man-of-the-match in the league victory over Benetton Treviso at the RDS last February.
The former St. Columba's playmaker graduated from the Leinster Academy in May with a HETAC diploma and was then rewarded with his first professional contract.
This was achieved after an incredible recovery from the serious eye injury, which happened in an All-Ireland League game for his then club UCD, against Lansdowne.
Commenting on his retirement at the age of just 21, McKinley said: "After the accident happened, I was advised that a cataract would develop. But the surgeon was surprised that it did not happen until 18 months after the initial incident.
"I was determined to overcome the temporary loss of sight and get back playing rugby so I was thrilled to return to training in July 2010, six months after the accident.
"It was such a great source of relief to get the chance to pull on the Leinster jersey again. In May, though, I played a game for the Leinster Development side and I had to stop after 15 minutes because of blurred vision.
"I then sustained a detached retina a week before pre-season and three operations over this summer couldn't save my sight in that eye.
"I officially advised Joe (Schmidt) about my decision (to retire) last week after consulting with Billy Power in the Eye & Ear Hospital.
"While I am very upset by this turn of events, now it's about planning the next stage in my life. I have been in and out of Riverview a fair bit and I have a lot of interests outside of the game.
"At this point I like the idea of maybe pursuing a career in coaching. I'm also exploring the possibility of going back to college and I'm currently in training with Jason Cowman, the Leinster strength and conditioning coach, for a triathlon in Portmarnock on September 24."
He added: "I'm trying to stay positive because there are bigger issues in life that people face every day and everyone has been so incredibly supportive.
"I will always remember when I captained Ireland against Samoa in the Under-20 World Championship in Japan in 2009 as a particular point of pride in my career.
"I would like to thank my family, my girlfriend Cordelia, Mr Power and all of his colleagues in the Eye & Ear Hospital who oversaw the operations from the start in consultation with Leinster's Professor Arthur Tanner and all of the medical staff at Leinster.
Leinster head coach Joe Schmidt added: "It is always a sad time whenever a player has to call time on his career, but it is especially difficult when a player with as bright a future in the game as Ian has to make the decision so prematurely.
"The courage and determination that Ian displayed in firstly coming back from the loss of sight and then to force his way back into the team is indicative of both his strength of character and his playing ability.
"His dedication to recover from the initial accident was an inspiration to his team-mates and he was, and remains, a popular member of the squad.
"I know that Ian will be successful in whatever he decides to do over the next few years and I would like to thank him for his significant contribution to the success of the province over the course of his career."
Name: Ian McKinley
DOB: December 4, 1989
Height: 1.80 m (5' 11")
Weight: 90 kg (14 st 2 lb)
Club: St. Mary's College RFC
School: St. Columba's College, Rathfarnham
Leinster Caps: 6
Leinster 'A' Caps: 5 (v Bristol, Munster x2, Ulster, Connacht)
British & Irish Cup Caps: 8 (v Plymouth Albion x2, Cornish Pirates x2, Newport, Worcester Warriors, Currie, Bedford Blues)
Ireland Under-20 Caps: 9 (v France, Italy, England, Scotland, Wales, Argentina, New Zealand, Wales, Samoa)
Leinster Under-20 Caps: 4 (v English Counties, Ulster, Munster, Connacht)
Ireland Under-19 Caps: 2 (v Italy, France)
Leinster Under-19 Caps: 3 (v Ulster, Munster, Connacht)
Leinster Schools (Under-19) Caps: 4 (v Bedford Academy, Munster, Connacht, Ulster)
Leinster Schools 'A' Caps: 3 (v Connacht x2, Munster)