The 39-year-old midfield genius, who helped Spain win the World Cup in 2010 and won four UEFA Champions League titles and eight La Liga titles with Barcelona, was cheered by fans at the Azadi Stadium in Tehran where already-eliminated Persepolis produced an improved display to register only their second win in six matches.
Just 11,000 spectators were present in the 100,000-capacity stadium, mostly wearing the red of Persepolis, who won the Iranian league title days before this match.
Several home fans brandished banners reading "Adios Xavi" to show their appreciation of the player who with Andres Iniesta formed the backbone of one of Barcelona's greatest ever sides.
Xavi was also honoured by the Persepolis management who presented him with a jersey featuring the number six he has worn in his career.
But Al Sadd's second defeat in a row, following their 4-1 thrashing by domestic rivals Al Duhail in last week's Amir Cup final in Doha, meant Xavi's illustrious career ended in a low-key fashion.
- Low-key send-off -
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Xavi, who became the first player in history to play 150 UEFA Champions League matches, has indicated that he will stay in Qatar to begin a coaching career, probably remaining in a highly-paid role with Al Sadd, rather than return to Spain.
"The idea is to start as a coach in Qatar, where there is less pressure, to test myself and get some experience," Xavi told Spain's Efe agency in Tehran just hours before facing Persepolis.
"I think football has bid farewell to one of the best players in the world ... it was beautiful to work with a player with Xavi's calibre," Al Sadd's current head coach Jesualdo Ferreira said after the match.
Ferreira has predicted Xavi "will be a great manager".
Fellow Al Sadd midfielder Gabi also paid tribute to his captain and fellow Spaniard, calling him a "role model".
Al Sadd had already qualified for the last 16 of the Asian tournament, although Xavi will not play on, and they had hoped a victory on Monday would be an apt send-off for their captain who has been with them for four years.
But although the Spaniard produced some signature passes and saw a late free-kick sail agonisingly over the goal, it was Persepolis who made the most of their chances.
Early on, Xavi collected the ball and passed to Baghdad Bounedjah but the Algerian's lob was pushed away by Persepolis goalkeeper Alireza Beiranvand.
The Iranians got their first chance in the 16th minute and made it count with Mehdi Torabi setting off on a 30-yard run following a pass from Ahmad Noorollahi and scoring with a thunderous drive past Al Sadd goalkeeper Saad al-Sheeb.
They could have consolidated their lead in the 60th minute but Al Sadd midfielder Salem al-Hajri found himself perfectly positioned to clear the ball on the goalline after Mohsen Rabikhah had beaten goalkeeper al-Sheeb from the edge of the penalty box following a corner.
It seemed all the luck was with Persepolis as Al Sadd were denied by the woodwork in the 64th minute when 2018 AFC Player of the Year Abdelkarim Hassan's powerful 35-yard shot smacked off the post.
Persepolis made it 2-0 in the 67th minute with Torabi racing down the left flank and passing to Ali Alipour, who evaded Tarek Salman's attempted tackle before a powerful low shot beat al-Sheeb.
Xavi had a great chance to go out in style but his 81st minute free-kick just skimmed the top of the net and went behind for a goalkick.
Also in Group D, goals from Omar al-Somah and Abdulrahman Ghareeb helped Saudi's Al Ahli beat Uzbekistan's Pakhtakor 2-1 to finish second behind Al Sadd.
Al Ahli needed to beat Pakhtakor to finish second behind Al Sadd and they did exactly that to make the next phase with nine points, one behind the Qataris.
In Group C, Saudi Arabia's Al Hilal and Qatar's Al Duhail played out a 2-2 draw. Both teams had already qualified for the last 16, with the Saudis assured of the top spot even before kick-off.