Baker, 35, has ridden over 1,300 winners in a career spanning 18 years and partnered his first Classic winner in the 2016 St Leger at Doncaster aboard Harbour Law.
In a statement issued by the Injured Jockeys Fund, Baker said: "Whilst my recovery is going well, I have been thinking about the future and in consultation with Dr Jerry Hill at the BHA, have accepted it is not medically possible for me to come back to race-riding."
He continued: "Since my accident, my wife Nicola and family have been incredibly strong and their positivity has made it so much easier for me to get through the bad times.
"The Professional Jockeys Association, the Injured Jockeys Fund and Oaksey House have looked after me, and I'm well aware that if it wasn't for their help, I wouldn't be as far forward as I am. I would like to thank all of them so much, as well as the wider racing community for their support and incredible kindness.
"I have not decided what my future holds, but I will continue with my recovery programme and get as well as I can.
"Although I will not be able to race-ride again, I consider myself extremely fortunate to be where I am now."
Baker was riding Boomerang Bob for Jamie Osborne at St Moritz when the horse was brought down and fatally injured.
After being airlifted to a trauma hospital in Chur, an MRI scan confirmed he had suffered bleeding on the brain.
Baker will not rush into making plans for the future, although he would like a role within the racing industry.
"I spoke to my friend Ted Durcan about it last night and I suppose I can move on now," he told At The Races.
"That chapter's gone and I've just got to accept it and make the best of it I can.
"I'm going to do a couple of courses with JETS (jockeys employment and training scheme) and see what happens.
"I'm not going to rush into anything. I just want to get as well as I can. Getting my driving licence back is a big thing. It's frustrating having to depend on other people having to drive you around.
"I know I'm making progress because I remember what I felt like before and everything was natural with balance and so on getting around. Now I have to concentrate and that's become easier as time goes on and hopefully it will keep on improving, but I'm well aware at some stage it is going to slow down. And if this is as good as it's going to get, I'll take it.
"I've always liked the thought of training, but financially it's a very hard thing to do. I definitely want to stay within the racing industry doing something."
Baker rode the first of his 1,350-plus winners in 1999. His first Group One success came on Seal Of Approval in the Qipco British Champions Fillies & Mares Stakes at Ascot in 2013.
Other big-race wins included Thistle Bird in the Pretty Polly Stakes at the Curragh in 2014 and Quest For More in the Prix du Cadran at Chantilly in 2016.