"We continue to hope Japan eventually reconsiders its position and will cease all whaling in order to advance the protection of the ocean's ecosystems."
Japan's Chief Cabinet Secretary Yoshihide Suga said the country will resume commercial whaling in July next year.
"Regrettably, we have reached a decision that it is impossible in the IWC to seek the co-existence of states with different views," Suga said.
Japan has hunted whales for centuries but has reduced its catch following international protests and declining demand for whale meat at home.
The withdrawal from the IWC may be a face-saving step to stop Japan's ambitious Antarctic hunts and scale down the scope of whaling to around the Japanese coasts.
Fisheries officials have said Japan annually consumes thousands of tons of whale meat from the research hunts, mainly by older Japanese seeking a nostalgic meal.
Greenpeace Japan executive director Sam Annesley said the decision was a backwards step for the country.
"The Government of Japan must urgently act to conserve marine ecosystems, rather than resume commercial whaling," Annesley said.
"The declaration today is out of step with the international community, let alone the protection needed to safeguard the future of our oceans and these majestic creatures."
The IWC imposed a commercial moratorium in the 1980s due to a dwindling whale population.
Japan switched to what it calls research whaling and says stocks have recovered enough to resume the commercial hunt.