The FA announced 65-year-old Clemence's departure on Thursday, bringing to an end a long association with the England team.
Clemence won 61 caps in his playing career, during which he and Peter Shilton jostled for the number one shirt.
He joined the FA in 1996 and has served as goalkeeping coach in the England set-up until recently, with Dave Watson taking over the position.
The FA said in a statement on its website: "Following a long and illustrious career in football, Ray Clemence has announced his retirement.
"Clemence, who recently turned 65, leaves his role with the FA as head of national teams at the end of this month."
Clemence represented England from 1972 to 1983, and played his club football initially at Scunthorpe but to wider acclaim at Liverpool, where he won five league titles, and Tottenham.
He celebrated his 65th birthday in August and said: "I have been lucky to have had 47 years in this wonderful game, of which 17 of these have been spent at the FA.
"I have been fortunate to meet and work with some wonderful people at all levels throughout my time here.
"I have enjoyed working with great players and also seeing young players start in the U16 development team and progress through those teams to the senior side.
"There are some frustrations working in the FA, but it is full of hard-working, dedicated staff who are all trying to improve the state of the game.
"I leave the FA with many happy memories that will stay with me for the rest of my life."
Sir Trevor Brooking, director of football development at the FA, commended the contribution of his former England team-mate.
Brooking, who also recently turned 65, said: "Ray has been an excellent ambassador not only to the FA, but to football in this country, and in particular in elevating specialist courses for the goalkeeping position.
"His standards both as a player and as a coach have been relentlessly high, and particularly in my time I have seen his impact on a succession of young players who have come through and established themselves at the highest level.
"We wish him the very best in retirement, and he will always be welcome back here at Wembley."