Yao's contract had expired after this past season with the Rockets, who have missed the playoffs the last two seasons.
They played nearly all of that time without Yao as he battled various injuries. He was limited to five games last season after missing all of 2009-10.
"We'd all be really happy if Yao comes back to play, and I hope he can," new Rockets coach Kevin McHale said when he was introduced last month. "I think he'll give it his best shot. His body is going to dictate if he can come back and play. That's all going to be laid out in the future.
"But who wouldn't like Yao Ming, a big guy who can really make shots, just a huge force in the middle? That's out of my control. We'll see where that goes."
In May, the 7-foot-6 Chinese star, plagued by lower-body injuries in the second half of his career, said his surgically repaired left ankle was healing properly and he wanted to remain with the Rockets. The Rockets said they were interested in re-signing him if he came back healthy.
But Yao, who had surgery in January, said he wouldn't know until this summer if he'd be able to play again. He became a restricted free agent July 1.
Yahoo! Sports reported he has informed the league office he is retiring.
But NBA spokesman Tim Frank said that was not the case.
"We have not received official notification of his retirement," he said.
Recently retired center Shaquille O'Neal congratulated Yao in an online video post.
"We're going to miss you, bro," O'Neal said. "You're one of the greatest players ever to come out of China. You're one of the greatest players, period. I'm going to miss you, brother. Enjoy retirement. Let's go on vacation, bro. Me and you."
The Rockets declined to comment on the report because of the lockout, and the NBA has not received official retirement paperwork from Yao.
John Huizinga, one of Yao's American agents, would not confirm the report during a phone interview on Friday. He said Yao's recovery was "on track," but Yao's future with the Rockets has been uncertain for some time.
"He's really enjoyed his time in Houston," Huizinga said. "If he feels that he's recovered enough to play, and if the lockout ever ends, and if the Rockets are interested in him, then there's certainly a good chance he'll stay in Houston.
"But there are a whole lot of 'ifs' in that statement."
An eight-time All-Star selection, Yao averaged 19 points and 9.2 rebounds in his eight seasons, but his impact on the league goes far beyond the numbers.
Yao single-handedly expanded the NBA's reach throughout Asia, spiking merchandise sales and TV ratings for games after the Rockets made him the top overall pick in the 2002 draft.
Marc Ganis, president of Chicago-based consultancy SportsCorp, said Yao's worldwide impact on the league will probably never be duplicated by another player.
"There's never been anything like him before," Ganis said, "and I doubt we'll ever see anything like him again."
Ganis said Yao became an iconic symbol of China's growth and status. He carried the Olympic torch through Tiananmen Square and proudly carried his country's flag during the opening ceremonies in Beijing in 2008.
He also donated $2 million and set up a foundation to rebuild schools in the wake of the 2008 earthquake in Sichuan.
"He was the embodiment of the cultural aspirations of the Chinese society," Ganis said. "He always talked about 'team,' always talked about sacrifice, always talked about those who needed help."
Yao was already a larger-than-life national hero in China when he joined the Rockets. He played for the Chinese national team in the six summers before he joined the NBA.
Skeptics doubted Yao was ready for the league, but he made the All-Rookie team after averaging 13.5 points, 8.2 rebounds and 1.74 blocks in 82 games. He was the only rookie to lead his team in both rebounds and blocks, and the only rookie to rank in the top 20 in three statistical categories.
Yao helped the Rockets reach the playoffs in the next two seasons. Houston acquired versatile star Tracy McGrady before the 2004-05 season, and the franchise envisioned the duo as the cornerstones of a championship team.
The Rockets lost first-round series in seven games in both 2005 and 2007. Yao and McGrady both started encountering injury problems in the seasons that followed.
Yao played in 77 games in the 2008-09 season and with McGrady sidelined, helped Houston reach the second round of the playoffs for the first time since 1997.
But Yao broke his left foot in a postseason game against the Lakers and underwent complex surgery that sidelined him for the entire 2009-10 season. He lasted only five games at the start of the 2010-11 season before breaking his left ankle. He underwent surgery in January, and was lost for the season again.
Yao, who turns 31 in September, missed a total of 250 regular-season games over the past six seasons due mostly to injuries to his left foot and leg.
The Rockets missed the playoffs for the second straight season in 2010-11, parted ways with coach Rick Adelman and hired Kevin McHale. McHale said Yao's future with the team was contingent on his health.
"We'd all be really happy if Yao comes back to play, and I hope he can," McHale said. "I think he'll give it his best shot. His body is going to dictate if he can come back and play. That's all going to be laid out in the future."
Ganis said the NBA's popularity in China may never be the same without Yao.
"There was a fascination, with Yao Ming and the Chinese fans," Ganis said. "It was almost like the Michael Jordan effect. The casual fans that Jordan brought to the NBA, when he retired, they simply disappeared.
"That doesn't mean there isn't interest, that doesn't mean there isn't significantly higher, long-term interest in the NBA there. But the numbers the NBA attracted, in Yao Ming's heyday, will never be reached again -- unless there's another Yao Ming around the corner."
