Newport-born Thomas made his debut for the region in the LV= Cup game against Sale Sharks at Rodney Parade in November 2009.
The 28-year-old Cardiff University graduate went on to make a further 53 appearances over five seasons for the Dragons, scoring three tries.
The versatile forward made appearances for the Dragons age grade set-up at U16s, U18s, and U20s, learning his trade whilst playing for Ebbw Vale, and was part of the Wales U20s team that finished seventh in the 2010 IRB Junior World Championship.
He moved on to play for Newport, Pontypool and Bedwas before signing a first senior contract with the Dragons in the 2014/2015 season.
“It’s a huge disappointment to call an end to my Dragons career, but I’m now looking forward to the next chapter in my life and thank the region, particularly Bernard Jackman and Managing Director Mike Davies, for their understanding and support throughout this process,” said Thomas.
“Unfortunately I’m now unable to train full-time to the extent required at a professionally level because of my knee.
“However, this isn’t about retirement for me as I still hope to play the game at the highest level I can, whilst exploring opportunities and a new career away from rugby.
“I’d like to thank everyone at the Dragons for their support during my time at the region, wish my team-mates all the best for the future and thank the supporters for the backing they have always given me. I look forward to now supporting the team and joining the fans at Rodney Parade.”
Head Coach Bernard Jackman said: “James has been a fantastic professional for us during his years at the Dragons, coming from the region and through the Academy ranks to make his mark in the senior side.
“He leaves us with our very best wishes as he looks to fulfil his future ambitions in another industry."