ESSENDON forward Mark Williams has announced his immediate retirement from AFL football due to a degenerative knee injury.

The 28-year-old played 111 matches for Hawthorn from 2000-09, including the club's 2008 premiership, before being traded to Essendon in a complicated four-way deal for Andrew Lovett.

He played the first four games of 2010 and kicked five goals, before poor form and injury saw him never recapture his place in the side.

"I am grateful for the career I have had at Essendon and Hawthorn and the opportunities that football has given me," Williams told essendonfc.com.au.

"I would have loved to have been able to keep playing and while my injuries have not allowed me to do that, the experiences that I have had - including a premiership at Hawthorn - far outweigh that."

Essendon football manager Paul Hamilton said Williams' brilliant set-shot kicking and awareness around goal would be remembered.

"This is obviously a difficult decision for Mark but he should be enormously proud of his achievements throughout his career," Hamilton said.

"Mark will be remembered as a 100-game player with a remarkable natural football ability who could prove damaging in front of goal.

"On behalf of the Essendon Football Club, I would like to thank Mark for his commitment to the club and wish him every success in his future endeavours."

He was contracted to the club until the end of 2012, but Hamilton said at a media conference that Essendon and Williams had come to a financial agreement.

"We've settled and what that does is allows another player to be on our list next year," he said.

"In the end, in a roundabout way, we traded Andrew Lovett for Mark Williams and Jake Carlisle, so we're hoping Jake becomes a very good player for us."

Former Hawthorn teammate Michael Osborne said Williams was "pretty freaky" as a player.

"He had some abilities a bit like Lance Franklin or Cyril Rioli. A bit of both of them. He could win the game off his own boot, so he was pretty valuable to us in the time that he spent here."

Callum Twomey covers Essendon news for afl.com.au and essendonfc.com.au. Follow him on Twitter at @Cal_Twomey