Cavendish was taken away in an ambulance as Pedersen won a bunched sprint ahead of Belgian duo Jasper Philipsen and Wout van Aert.
Former world champion Pedersen was swift to hail Cavendish who had been bidding to overtake the record of 34 stage wins he shares with Belgian great Eddy Merckx.
"It's sad a legend like him ends his Tour like that," said the former world champion.
Sprint specialist Cavendish was forced to exit after suffering a suspected broken collarbone in a fall about 60km from the finish line.
The Astana rider remained on the road for a couple of minutes rolling in agony every time he reached towards his right shoulder.
Cavendish was ashen-faced as doctors closed the ambulance door with organisers later confirming his withdrawal.
In the overall standings Jonas Vingegaard kept the leader's yellow jersey 25 seconds ahead of Tadej Pogacar a day ahead of an expected duel between the duo on the slopes of the Puy de Dome volcano.
"It was really sad indeed to hear that news," said defending champion Vingegaard of Cavendish's exit.
