The country's withdrawal, which will be officially announced to the country as early as next week, is planned for 2019 after years of debate between pro- and anti-whaling members of the IWC.
The Japanese government is considering commercial whaling only in seas near Japan and its exclusive economic zone, Kyodo reported.
Officials in Japan say eating whales is part of its culture.
Commercial whaling was banned by the IWC in 1986 after some whales were driven nearly to extinction.
Tokyo now observes the moratorium but exploits a loophole to kill hundreds of whales every year for "scientific purposes" as well as to sell the meat through hunting whales in the Southern Ocean since 1987. Japan dresses up its hunt as "research", despite an global court order, while Norway and Iceland use clauses allowing them to contest the IWC ban.
Supporters of whaling say that it is a Japanese tradition and that foreign critics who consume farmed and hunted animals are hypocrites.More news: Beijing Lodges Protest Over Chinese Nationals Indicted for Cyberespionage in US
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In 1982, the IWC introduced a moratorium on all commercial whaling.
"If commercial whaling based on science is completely denied, and if there's no possibility for the different positions and views to coexist with mutual understanding and respect, then Japan will be pressed to undertake a fundamental reassessment of its position", the minister said.
In September it proposed the ban should be lifted, claiming whale numbers are increasing, but anti-whaling nations led by Australia, the European Union and the United States voted down Japan's proposal. But one year later, Japan resumed hunting in the region, albeit with a reduced quota that was two-thirds of its previous catch, The Guardian reported.
Currently, four countries - Iceland, Norway, Canada and Indonesia - conduct commercial whaling of 13 species covered by the IWC moratorium, including blue whales. Japan would mainly hunt in its own waters. Critics accuse Japan, however, has always been to use science as a cover for commercial whaling by the back door. Japan had been threatened previously, and, if necessary, from the IWC to withdraw.
Japan has previously threatened to quit the IWC, arguing that the moratorium was supposed to be a temporary measure and accusing the IWC of abandoning its original objective - managing the sustainable use of global whale stocks.
Japan joined the organisation in 1951.