Second, its commercial whaling will be limited to its territorial waters and its exclusive economic zone.
The IWC imposed the moratorium on commercial whaling three decades ago due to a dwindling whale population.
The decision was made at a cabinet meeting on Tuesday after the government decided it would be hard to resume commercial whaling while a member of the worldwide body.
Commercial whaling was banned by the IWC in 1986 after some species were driven nearly to extinction.
Japan has defied the protests to conduct what it calls scientificresearch whaling, having repeatedly said its ultimate goal was to whale commercially again.
In 2014, the International Court of Justice ruled that Japan should halt Antarctic whaling.
Japan began scientific whaling in 1987, a year after an worldwide whaling moratorium began.
Mr Suga said: "At the IWC general meeting in September this year it became evident once again that those supporting the sustainable use of whale stocks and those supporting protection can not co-exist, leading us to this conclusion".
"But if we don't explain internationally that whales are increasing. people won't understand", she added.
"As a result of modern fleet technology, overfishing in both Japanese coastal waters and high seas areas has led to the depletion of many whale species", Greenpeace International said.
The whale hunts will abide by global laws and a quota calculated under a method adopted by the IWC.
"It's clear that the government is trying to sneak in this announcement at the end of year, away from the spotlight of worldwide media", said Sam Annesley, the Executive Director at Greenpeace Japan.
In the 1950s, the practice reached its peak amid growing demand for whale meat as a key source of protein in the years following World War II, when the nation was poor and recovering from the devastation.
Influential lawmakers in Prime Minister Shinzo Abe's party have long lobbied for a resumption of commercial whaling, and the PM's own district includes a whaling port in Western Japan.
"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".
Tokyo argues that whaling is an important part of Japan's traditions, and Suga said the withdrawal would allow fishermen to "pass our country's rich whaling culture onto the next generation". Japan was the only country with an ambition to return to commercial whaling in the Antarctic Ocean.
It makes no secret however of the fact that meat from the expeditions ends up on dinner tables. Fisheries officials say that whale meat is more popular with older segments of the Japanese population than among the young.