The French driver was in 5th place in the rally.
At 48, the nine-time WRC world champion is doing a "freelance" for Ford as in the Monte Carlo rally he won in January.
According to M-Sport Ford, a fire broke out in the engine compartment of Loeb's car at the end of the 4th special, preventing him from continuing the rally.
"It's frustrating to retire like this because the feelings were good, the car was good and we had prepared well (...) The rally is very hard, a lot of dust and stones. It's disappointing but we we can't do anything about it," Loeb said.
His previous and only participation so far in the Kenya Rally was in 2002.
This event was then removed from the WRC world championship calendar before returning there last year, with victory going to eight-time world champion Sébastien Ogier (Toyota).
The latter occupied Friday at the end of the 4th special the 2nd place behind the Briton Elfyn Evans, also on Toyota.
© 2022 AFP