Burns has been found to have damage to his aorta (the largest artery in the body) and may now require heart surgery.
"I am personally relieved that this serious condition has been identified off the field of play and would therefore like to thank our medical team at the Dragons, staff at the Royal Gwent Hospital and University of Wales Cardiff for all their efforts in ensuring Lloyd has and will continue to receive the highest standards of care," said Dragons director of rugby Robert Beale.
"Everything Lloyd has achieved in life he has earned through hard work and dedication. His enforced retirement from the game has come as a massive shock to Lloyd and his family and will resonate throughout the rugby world."
Burns made a rapid rise on to the international scene last year, winning seven caps and earning selection for Wales' World Cup squad.
The former Cross Keys front rower progressed from Principality Premiership rugby to the Test stage in just 18 months and had been expected to continue to challenge for a place on the summer tour to Australia and the upcoming autumn fixtures at the Millennium Stadium.
He made his most recent Wales appearance in the Bronze Medal Match with the Wallabies in New Zealand in October but missed the RBS 6 Nations because of his neck injury.
Burns had initially hoped to return to action later this month but has instead been advised to call time on his career with immediate effect.