Three operations have failed to correct fully an injury which Rudd suffered in training in January 2021.
His last involvement in the first-team squad was in November, with his final game having come against Liverpool in the Carabao Cup in October.
Speaking at the Euxton training ground on Thursday morning, Lowe said: “It is a sad blow for Declan, all his team-mates and the club.
"I spoke to Dec numerous times but never had the opportunity to work with him.
"Jogging my memory, I think I played against him. He was a fantastic keeper.
"A conversation I had with him was before he went away with his family and was going through the mix with this.
"Ultimately he has got kids, a young family, he wants to be chasing those kids around the park, jumping in swimming pools with them, taking them places.
"If Dec was to carry on, maybe he wouldn’t have had that opportunity if he injured himself again.
"It is the right call for him and his family.
"We wish him all the best in the next venture he chooses to do, he will be a big miss to us and football in general because he was a fantastic goalkeeper.”
Rudd first joined PNE on loan from Norwich in January 2013 and returned in a second deal for the whole of the 2013/14 season.
He signed in a permanent £900,000 move in June 2017 and pulled on the Preston keeper’s jersey 196 times.
The injury which has led to him retirement was one he suffered at the end of a training session, cartilage in his knee slipping out of place and lodging in the back of his knee cap. He underwent surgery a few days later.
It forced him to miss the second-half of last season but he returned to action in pre-season last summer and started the first game of the campaign against Hull City.
He got a bang on the head early in that game and had to be substituted as per concussion protocol.
Rudd played the Carabao Cup games against Morecambe, Cheltenham and Liverpool, with him back-up keeper on the bench for Championship matches until the start of November.
He had surgery in November and again in December.
Lowe said: "Dec hasn’t been around for a little while, he was here when I first took over and was going back and forth.
"I told him he needed to be back with his family, spend time in Norwich with them.
"That has been good for him. We’ll see him next week and have a good a chat.
"It’s the right call, he has made the right one, but it’s obviously an early finish because goalkeepers can go right through until they are 40 nowadays.
"This is a sad time for Declan’s family but one I think he will get over in time, whether he chooses to stay in football ot go into business – whatever it is, we wish him al the best.”