The 29-year-old started his professional career with Liverpool and made seven first-team appearances for the Reds before leaving for Bradford City in 2012.
The former England Under-19 international made 239 appearances for Bradford before joining Bolton in 2017, signing a two-year contract with the club.
Darby has been forced to retire from football, however, having been recently diagnosed with MND.
"It is with great sadness that I announce my immediate retirement from professional football due to a recent diagnosis of motor neurone disease," Darby said in a statement.
"I would like to take the opportunity to thank my teammates, Phil Parkinson and all the staff at Bolton Wanderers football club for their amazing support at what has been an extremely difficult period for myself and my family.
"I would like to ask for privacy at this time so I can adjust to the battle I have ahead and so that I can spend time with those closest to me."
Parkinson added: "This is heartbreaking news for Stephen and his family and the thoughts of everybody at Bolton Wanderers football club are very much with him and Steph.
"He is an outstanding professional and a fantastic person. He was simply magnificent during his time at Bradford and was a key figure in the resurgence of Bradford City as a football club.
"He typified everything the city and the football club represented and led by example on and off the pitch. The Bolton Wanderers fans didn't see the best of him due to limited first-team opportunities, but I can assure everyone that he made a significant contribution in last year's survival.
"He constantly set high standards in training every day and encouraged and drove his fellow teammates on. All the staff and players at Bolton Wanderers football club think the world of him and are determined to give him every possible bit of support."
Darby last turned out for Bolton in December 2017.