"I've come to realise that there are more important things than victories and defeats," the 33-year-old told a news conference organised by the Swiss champions.
Frei, who ended his national team career shortly after a goalless draw against Bulgaria in March last year, scored 42 goals in 84 appearances.
The former Borussia Dortmund, Stade Rennes and Servette Geneva striker played at two World Cups and two European championship tournaments with mixed fortunes.
Frei's dreams of leading Switzerland to success as they co-hosted Euro 2008 were shattered when a knee injury forced him to limp out of their opening match with the Czech Republic before halftime. The sight of Frei wiping tears from his captain's armband was a poignant moment of the tournament
At Euro 2004, he was banned for three games on video evidence for spitting at England's Steven Gerrard and, in remorse, adopted a llama at Basel zoo - the Andean pack animals spit a foul-smelling substance at aggressors when provoked.
At club level, Frei was Ligue 1 topscorer in 2005 with Stade Rennes and Swiss Super League topscorer for the past two seasons with Basel.
Basel said he had played 604 professional matches, scoring 307 goals.