In the offseason, Hoffman expressed interest in taking over the closer role for a team near his home in San Diego, but he did not wish to return as a setup pitcher and diminish his accomplishments. The Arizona Diamondbacks, where old friend and former Padres general manager Kevin Towers was the GM, considered Hoffman a backup option as their closer had they not managed to sign J. J. Putz. Hoffman believed he could still pitch in the big leagues, but with all of the closer roles for West Coast teams filled he elected to retire, announcing his decision on January 11, 2011. He revealed that elbow tendinitis plagued him for most of the first half of 2010, though he never used it as an excuse for his performance. Hoffman had received three cortisone injections that year with the Brewers. Hoffman retired with 601 saves as the all-time saves leader in MLB history. He had no desire to sign a ceremonial one-day player contract to retire as a Padre. "I don't believe that's the right way [to retire]", said Hoffman.
The Padres retired Hoffman's No. 51 at Petco Park in a pre-game ceremony on August 21, 2011, against the Florida Marlins. San Diego Mayor Jerry Sanders declared it "Trevor Hoffman Day." The ceremony was patterned after the show This Is Your Life, featuring over 40 of Hoffman's former teammates and coaches. Brian Johnson, the lead singer on AC/DC's "Hells Bells", paid tribute in a video to Hoffman for "rocking the mound." In a nod to Hoffman's late father, Ed, the Padres presented Hoffman with a mint condition 1958 Cadillac convertible; his father loved driving his family in a convertible. For the National Anthem, the Padres played a video of Ed singing "The Star-Spangled Banner" at Fenway Park on Opening Day in 1981 when Hoffman's brother, Glenn, was the starting shortstop for the Red Sox.
During the time Hoffman held the career record for saves, many still considered Rivera the best closer of all time. Like many other relievers of his era, Hoffman was compared to Rivera and his success in the playoffs. While Hoffman had 601 regular-season saves, he only had four in the playoffs along with a 3.46 postseason ERA. He lacked the postseason opportunities and success of Rivera, who had 42 saves and an 0.70 ERA in the playoffs as the Yankees advanced to the postseason 17 times and won five World Series during his career. During Hoffman's tenure in San Diego, the Padres won at least 90 games only twice and had nine losing seasons, including five with no more than 70 wins. Hoffman, however, did blow a save opportunity in his only World Series appearance and also failed on save tries twice in the final three days of the 2007 season as the Padres vied for the playoffs. Rivera broke Hoffman's career save record in 2011, and finished his career with 652.
Coinciding with his retirement from playing in 2011, Hoffman returned to San Diego as a special assistant to Padres team president and COO Tom Garfinkel. "There's been a turnover of people [in the Padres front office] who wanted to reconcile and I've been cool with it. A couple of years definitely makes a big difference", said Hoffman. In addition to his front office role, he also served as an instructor during spring training. In 2014, Hoffman became San Diego's upper-level pitching coordinator, essentially an additional pitching coach for the Padres at their Double-A and Triple-A levels. His new role also involved assisting San Diego general manager Josh Byrnes. Under General Manager A. J. Preller in 2015, Hoffman became senior advisor for baseball operations, overseeing pitching instruction at all levels of the Padres' minor league system. Hoffman was the bullpen coach for the Great Britain team during the qualifying round of the 2017 World Baseball Classic. He was eligible on the basis of his maternal ancestry to England.