The South Africa-born 33-year-old earned eight England caps, the last coming in the victory over Ireland in Dublin before the 2011 World Cup.
Fourie joined Sharks from Leeds in the same year but failed to make an impact for the club as he struggled with injury.
He is to be replaced in the Sale squad by former New Zealand international Daniel Braid, who has signed up until the end of the season.
"Unfortunately, Hendre has had to retire. We got the final confirmation last week after taking medical advice," said Sale director of rugby Steve Diamond.
"As a club we have backed Hendre 100 per cent in his battle to get fit but unfortunately, his shoulder has not recovered. His body has been battered so much that the shoulder won't recover."
But Diamond admitted the signing of Baird to replace Fourie is a welcome boost to his squad.
"Dan joins us at a critical stage of our season. He is a hard working flanker who tackles well and reads the game well too," he added.
"He arrived in the UK on New Year's Day and came to Carrington this morning to meet his new team-mates. He is an important signing for us and I am sure he will fit in perfectly."
Braid is keen to prove himself in the Aviva Premiership after missing out on a Super Rugby contract for the new season.
"It's great to get the opportunity to come to Europe and play a different style of rugby and live a different lifestyle," he said.
"I know (Sale centre) Sam Tuitupou quite well. We played school age rugby together back in New Zealand and with Auckland and the Blues, so he's given me a few tips.
"And I also spoke to Luke McAlister who used to play for Sale Sharks and he was really complimentary about the club.
"When I knew I was coming here I went online and had a look at the squad and some of the names here such as Sam and Danny Cipriani - and to see where Sale are in the table was a bit of a shock.
"But there are still quite a few games to go and with the win against Worcester, hopefully it's a case of onwards and upwards."
Source : http://www1.skysports.com/rugby-union/news/12321/8378108/Sale-and-England-flanker-Hendre-Fourie-retires-after-losing-fitness-battle
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