Top official spokesperson Yoshihide Suga said, Tokyo will officially inform the IWC of its decision by the end of the year, which will mean the withdrawal comes into effect by June 30.
The IWC banned commercial whaling in 1986, but some countries including Japan, Norway and Iceland have exploited a provision in the 1946 Convention for the Regulation of Whaling that allows whales to be killed for scientific purposes.
Environmental group Greenpeace condemned the decision and disputed Japan's view that whale stocks have recovered, noting also that ocean life is being threatened by pollution as well as overfishing.
The IWC forced a commercial moratorium in the 1980s due to a dwindling whale population.
"This is devastating news for the whales and we can only hope that conservation-minded countries like the United Kingdom will take appropriate measures to respond to Japan's decision, including the threat of sanctions". He said the country's ships will not hunt in the Antarctic or in the southern hemisphere, which was the main source of concern for Australia.
Suda said commercial whaling "will be limited to Japan's territorial waters and exclusive economic zones".
Japanese media said that Japan could no longer take advantage of the IWC exemption for scientific whaling if it withdrew from the group because the United Nations Convention on the Law of the Seas requires its signatories, including Japan, to work through "the appropriate global organisations" for marine mammal conservation.
Sam Annesley, executive director of Greenpeace Japan, said in a statement: "The declaration today is out of step with the global community, let alone the protection needed to safeguard the future of our oceans and these majestic creatures". It defies a 1986 worldwide moratorium on hunting endangered species. Australia's foreign minister, Marise Payne, and its environment minister, Melissa Price, said in a joint statement: "Australia remains resolutely opposed to all forms..."
Ms Fuchs says Japan carries great influence in other whaling countries, and its withdrawal from the IWC could encourage South Korea and Russian Federation to make the same move. "Critics say the practice is a cover for what actually amounts to commercial whaling.It means that whales can be taken for scientific studies and the meat can later be sold for consumption", the BBC says.
"This is the path of a pirate whaling nation, with a troubling disregard for global rule", she added. Whaling communities and those who work in the industry have welcomed the resumption of commercial hunts, but others have expressed concern about whales and the expected damage to Japan's reputation.
Some towns in Japan such as Taiji, Wakayama Prefecture, have a whaling tradition but have become the focus of intense global pressure by conservation groups.