Hodgson won 38 England caps over an 11-year international career while Mears represented his country on 41 occasions and made one Test appearance for the British and Irish Lions, against South Africa in 2009.
Lancaster spoke to both players during the summer tour of South Africa and they agreed that England need to blood younger players in their positions, with the 2015 Rugby World Cup in mind.
"Firstly, both Charlie and Lee have been outstanding senior players in the last six months and I cannot thank them enough for the support they have given me and this young squad as we move forward," Lancaster said. "With 80 caps between them they have a vast amount of experience and that has been invaluable.
"I had chats with both of them in South Africa and our thoughts were not too dissimilar - that if we are building a team for 2015 then, just as we did in January, we have to decide on which players will take us forward and be in the mix in three years' time."
Hodgson, 31, made his debut against Romania when he scored a national record 44 points but his international career never ran smoothly, with injury costing him a place at both the 2003 and the 2007 Rugby World Cups.
The presence of Jonny Wilkinson meant Hodgson was often cast in the role of understudy, never able to stamp his authority on the team, although he did play in the centre alongside Wilkinson for two matches of England's 2003 Grand Slam campaign.
Hodgson was selected for the 2005 British and Irish Lions tour and shone as part of the unbeaten midweek team, but his international career appeared to have hit the buffers in 2008, when his defensive frailties were brutally exposed by Ma'a Nonu on England's tour of New Zealand and he was dropped from the elite squad.
But Hodgson was also one of England's most naturally gifted playmakers, with an ability to play close to the line, and he returned to the national set-up last summer, only to miss out on a third World Cup selection when then-coach Martin Johnson opted to only take two fly-halves.
After four years out of the starting team, Hodgson was reinstated as first choice fly-half at the start of the 2012 RBS 6 Nations and he scored charge-down tries in closely-fought victories over Scotland and Italy before slipping behind Saracens team-mate Owen Farrell and, more recently, Toby Flood in the pecking order.
Hodgson said of the decision: "I have been very proud to represent England over the last 11 years.
"Wearing the shirt has always been the highest honour for me, not least in the last six months, and no-one would want to give that up.
"But Stuart and I came to the same conclusion that the time is right to let a new group of fly-halves take England forward.
"Saracens have been very good to me and been key to me getting back on the international scene and I can now fully focus on them, not to mention a young family."
Mears added: "The memories of playing international rugby will live with me forever.
"I feel privileged and proud to have experienced two World Cups and a British Lions tour and to have had outstanding team-mates.
While I won't be a part of it, having seen what Stuart has implemented over the Six Nations and in South Africa, I am excited about the future of this group of players and English rugby and I wish them all the best.
"I have at least one more year at Bath left and with a new coaching team I am excited about next season.”