During his illustrious career, Britain's Cavendish has racked up 161 victories, including 34 at the Tour de France to equal the record of Belgian great Eddy Merckx.
Cavendish made the announcement during a press conference organised by his Astana-Qazagstan team during the rest day at the Giro d'Italia in Coccaglio, a day after his 38th birthday.
"I've absolutely loved racing every kilometre of this race so far, so I feel it's the perfect time to say its my final Giro d'Italia and 2023 will be my final season as a professional cyclist," Cavendish said.
His explosive ability to win bunch sprints earned Isle of Man native Cavendish the nickname the Manx Missile.
Cavendish's fearless approach earned him 53 Grand Tour stage wins and he also won the road world title in 2011.
He also won an individual silver medal in the omnium on the track at the 2016 Rio Olympics and claimed three career world titles on the track in the Madison discipline.
Cavendish has suffered his fair share of bad luck too, crashing heavily during a sprint finish in Harrogate when the Tour de France came to Britain in 2014 and subsequently being ruled out of the rest of the race.
He was also diagnosed with Epstein-Barr Virus in 2017, an infection that causes glandular fever.
Cavendish enjoyed a remarkable return to form in 2021, winning four stages of the Tour de France with the Deceuninck-QuickStep team to match Merckx's record, his first stage wins at the race since 2016.
That year was to end badly, though, as he punctured a lung and broke ribs after a crash at the Ghent Six Day track event.
"Cycling's been my life for over 25 years. I've lived an absolute dream," said Cavendish, who will try to go past Merckx's record at this year's Tour de France.
"I love the sport more than you can even imagine and I can't see myself going too far from it, that's for sure."
British Cycling's Performance Director Stephen Park said Cavendish was the sport's greatest sprinter.
"He will be remembered by fans across the world for his 53 grand tour stage wins, and I'm sure that we will all be cheering him on as he looks to add to that total in his final months of racing," Park said.
"What most stands out in Cav as a sportsperson is the overwhelming sense of pride he showed each time he pulled on both the Great Britain Cycling Team and British national champion's jerseys."