Now 38, Nehra bid farewell at his home Feroz Shah Kotla stadium in New Delhi after not being part of the team for a T20 series against Australia last month.
The left-arm quick had been in and out of skipper Virat Kohli's T20 plans in recent months. He last played a one day international in 2011 and a Test match in 2004. His career in the longer versions of the game was curtailed by the injuries.
He went wicketless in Wednesday's match to return figures of 0-29 in his four overs but was carried by his teammates in a lap of honour.
"I will once again repeat that it is always good to retire when people are asking why, rather than why not," he told reporters in a marathon press conference that lasted 30 minutes.
"I consider myself lucky to sign off at my homeground. I am emotional but happy to play for almost 19 years as a fast bowler for Team india," the lanky paceman added.
Nehra bowled the first and the last over in the New Zealand chase as India won the match by 53 runs after posting a mammoth 202-3.
Nehra collected 157 ODI wickets plus 44 Test and 34 T20 scalps during his 18-year career, since making his Test debut in 1999 against Sri Lanka in Colombo.
He went under the knife 12 times during his career mainly because of the effects of his unwieldy action – called "mechanically incorrect" by batting great VVS Laxman – which added to his pace, accuracy and unpredictability.
He could whip up speeds up to 140 kilometers (85 miles) per hour. His run-up and a near-tumbling follow through was a treat for fans along with his animated gestures on the cricket field.
Nehra was a part of the Indian squad that won the 2011 World Cup in India, Sri Lanka and Bangladesh.
The Delhi native was also a vital part of India's 2003 World Cup campaign in South Africa, where the team ended up as runners-up to Australia.
At the peak of his powers, Nehra was often called upon to bowl the final over in a tense encounter. He is best remembered however for his career-best ODI figures of 6-23 against England at Durban during the 2003 tournament.
Nehra performed brilliantly in India's 2011 World Cup semi final win over arch-rivals Pakistan, returning figures of 2-33 at the Mohali Cricket Ground.
The paceman was unlucky to miss the final against Sri Lanka after he fractured his finger during an unsuccessful attempt to catch Pakistan skipper Shahid Afridi.
Nehra has also finished his Indian Premier League (IPL) playing career after successful stints with Chennai, Delhi, Mumbai, Pune and Hyderabad.
"I am content with my career. As an opitmist I will always look at the brighter side and look forward to the rest of my life which I believe would be better," he said.
"Now I can pass my experience to upcoming fast bowlers. I have seen failure and maybe can help others to improve," he added.
He has said he is weighing up coaching roles in domestic cricket and commentary stints as part of his retirement plans.