Roddick, a two-time Wimbledon finalist, suffered a twisted ankle when he slipped off the back of the court while trying to play a lob in the third game of the first set on Saturday.
The world number six carried on until the end of the seventh game when he called an injury time out and had his right ankle and foot heavily bandaged.
Once again he returned to court and held serve but, with the score at 4-4, he decided to retire.
Roddick, who was bidding for a record fifth Queen’s title, admitted being fit for Wimbledon had been upper-most in his thoughts when he called it quits and he still hopes to take his place in the All-England tournament, which begins on June 22.
“I’m going to do everything I can to play at Wimbledon,” Roddick said. “We’re scheduled to get it looked at again on Sunday and do some scans on it, but initial tests showed the stability and strength was okay.
“It’s just a range of motion that’s limited right now. So that’s good as far as I’m not walking in here saying I’m going to be out six weeks or anything like that. We’re looking at days, not weeks.
“If I’m healthy, I don’t think the injury will affect my chances at Wimbledon at all. I’ve had three and a half matches on grass but I think more importantly I’ve faced some tough circumstances in my last couple of matches.”
Roddick insisted the often slippery grass-court had played no role in the injury and wrote it off as pure bad luck.
“I tried to hit a lob, and I was kind of almost just back pedalling. I just misstepped,” he said. “There’s a difference in height between where the grass court ends and where the concrete goes, and I just unfortunately stepped at a bad angle.
“It could have happened walking off a sidewalk down a curb. It’s just one of those things.”
American sixth seed Blake insisted Roddick was right not to carry on because the risk of damaging his Wimbledon challenge was too great.
“It’s hard to win like this against such a good friend and good guy,” he said. “I think the only thing he would regret after this is if he had tried to keep going and possibly gone over on it worse and really endangered his chance of playing at Wimbledon.”