Kermit Washington, the shy, soft-spoken Washingtonian who made himself a National Basketball Association all-star, retired yesterday in typical fashion--with grace and dignity.

The only player from American University ever to play in the NBA, he said the succession of injuries that has plagued his 8 1/2 NBA seasons have caught up with him.

"It has come to the point where it bothers me constantly," Washington, 30, said of the back ailment that prevented him from coming here last week with the Portland Trail Blazers, the team he captained. "My whole game is jumping and hustling. To jump when you have bad knees and a bad back is very difficult. To hustle you have to be in shape and you can't be in shape if you can't practice."

"Everybody said Kermit got old overnight," said Washington. "But that's not true. It was just too painful for me to play. I was taking muscle relaxants to sleep. It got to the point where all I could do after a game was go lie down. I couldn't recover by the next game. It was painful and frustrating."

The skinny substitute at Coolidge High School who developed into a muscular 6-8, 240 pound all-America at AU--where he averaged 20 points and 20 rebounds as a senior and led the Eagles to their first appearance in the National Invitation Tournament--accepted an offer to be paid for the rest of this season and next, when his contract with the Trail Blazers expires.

"It was their choice," Washington said. "I could have sat on the bench, but that wasn't fair to the younger players and if they kept me they would have had to pay the insurance to cover my injuries."

Coach Jack Ramsay made the offer to open a spot on the roster for Kevin Kunnert, 30, an injury-prone backup center who has been on the injured list because of back spasms.

Washington appeared in only 20 of Portland's 40 games this season, playing just 418 minutes and averaging 5.8 rebounds and five points a game. Last season he played in 73 games, averaging 11.4 points and 9.4 rebounds.

A first-round draft choice of the Los Angeles Lakers, Washington spent his first three seasons as a seldom-used reserve before asking Pete Newell, a former NBA coach and now a scout for Golden State, to teach him to become a power forward.

Washington became a starter and a valuable member of the Lakers until that infamous night in 1977 when he badly injured Houston's Rudy Tomjanovich with a punch in the face. The Lakers, sued for several million dollars, traded Washington, to the Boston Celtics.

The following season Washington was traded to to San Diego. After averaging 11.3 points and 9.7 rebounds with the Clippers, he was sent to Portland, with Kunnert, as part compensation for San Diego signing Bill Walton.

Washington has expressed an interest in returning to San Diego to teach English in either college or high school.

"I want to settle back and think about what I want to do," he said. "But no, no more basketball. It really bothers me to walk away from basketball."