The whaling activity will be limited to the country's territorial waters and its 200-mile economic zone along its coast.
Japan suspended its hunt for one season to re-tool its whaling programme with measures such as cutting the number of whales and species targeted, but resumed hunting in the 2015-2016 season, capping its Antarctic catch with a quota of 333 whales annually.
"We have made a decision to withdraw from the International Whaling Commission in order to resume commercial whaling in July next year", Yoshihide Suga, top spokesperson for the Japanese government, told reporters.
New Zealand Foreign Minister Winston Peters welcomed Japan's decision to halt Antarctic whaling but said he was disappointed with the decision to resume any commercial whaling.
Tokyo has long exploited a loophole allowing whales to be killed for "scientific research" and says it is trying to prove the population is large enough to sustain a return to commercial hunting.
Japan began scientific whaling in 1987, a year after an global whaling moratorium began.
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.
Hideki Moronuki, a senior official at the Fishery Agency, told reporters: "A withdrawal is not the best option, but it is a better option in order to achieve Japan's major objective of commercial whaling".
Nevertheless, so-called scientific research hunts were exceptionally allowed under a controversial clause in the Antarctic Treaty.
"With this move the Japanese government is officially turning its back on worldwide cooperation around conservation measures, and one of the greatest conservation agreements ever made - the ban on commercial whaling", said Astrid Fuchs of Whale and Dolphin Conservation (WDC).
But consumption has declined significantly in recent decades, with much of the population saying they rarely or never eat whale meat.
Japan has hunted whales for centuries, and the meat was a key source of protein in the immediate post-World War II years when the country was desperately poor.
But the bid failed, with strong opposition from anti-whaling nations - led by Australia, the European Union and the United States.
Activist groups slammed the decision, with Greenpeace calling it a "sneaky" announcement.
Some towns in Japan such as Taiji, Wakayama Prefecture, have a whaling tradition but have become the focus of intense worldwide pressure by conservation groups.
Greenpeace Japan executive director Sam Annesley said the decision was a backwards step for the country.
It makes no secret of the fact that meat from the expeditions ends up on dinner tables, and argues that stocks of certain whales are now sufficient to allow commercial hunts to resume. "Engagement in whaling has been supporting local communities, and thereby developed the life and culture of using whales".