The 32-year-old St Eunan's clubman won the All-Ireland title with Donegal in 2012 and was in the side which lost to Kerry in last year's decider.
Kavanagh also helped Donegal to three Ulster Championship triumphs and a National League title.
He made his debut against Cork in 2001 and clocked up 132 Donegal appearances.
Kavanagh's last game for Donegal came in the defeat by Kerry in September's All-Ireland final at Croke Park.
The highpoint of the Letterkenny man's career was winning the Sam Maguire Cup two year earlier thanks to victory over Mayo.
Kavanagh, who will continue to play for St Eunan's, has become the first member of that All-Ireland winning squad to retire.
He played 49 championship games for Donegal, starting with his Ulster SFC debut in 2002.
Eamon McGee, Karl Lacey and Mark McHugh have been among the Donegal players to pay tribute to Kavanagh's service to the county.
"Rory Kavanagh was one of the best players I've played with. A true professional on and off the field. Taught me so much," said McHugh on Twitter.
McGee described Kavanagh as "without a doubt one of the best I've played with" while Lacey said the St Eunan's club was "still an unbelievable athlete".

The 30-year-old winger was named player of the season in his first year at The Valley, which included 13 goals.
"It was a no-brainer for me to sign a new contract," Holmes said. "Hopefully we can get promoted this season."
Holmes also produced six assists in his 38 appearances after joining on an initial two-year deal from Northampton Town in June 2016.

Stroud also remains a Conservative minority, while in Cheltenham the Liberal Democrats kept a majority rule.
The leader of Cheltenham's Conservatives, Rob Garnham, narrowly lost his seat to the Liberal Democrats, in a result that required a recount.
One of the country's youngest councillors was elected in Stroud.
In Gloucester, voters were deciding on 15 seats in the city.
Deputy council leader Jennie Dallimore held her Podsmead seat for the Conservatives, where she doubled her majority.
Stroud continues to be run by a Labour, Green and Liberal Democrat alliance.
Conservative Paul James, leader of Gloucester City Council, said it was a "big achievement" to defend the group's eight seats from the 15 being contested.
Overall the council is made up of 18 Conservative, nine Labour and nine Liberal Democrat seats.
The leader of the Liberal Democrat group in the city, Jeremy Hilton, said the council was balanced but it would require "a lot of close co-operation between the three groups" to do the best for Gloucester.
In Stroud, where a third of seats were up for election, the council is now made up of 22 Conservative, 20 Labour, six Green Party and three Liberal Democrat seats.
It meant an overall gain of one Conservative seat, three Labour seats and one Green seat and a loss of two Liberal Democrat.
Two seats on the council were vacant and one Independent candidate defected to the Conservatives.
One of the country's youngest councillors was elected in the Stroud district, when 20-year-old Tory Tim Williams won the seat for Bisley.
He said he would continue to work on his parents' farm while carrying out his duties.
In Cheltenham, the leader of the Conservatives, Rob Garnham, narrowly lost the Park ward seat to Max Wilkinson of the Liberal Democrats, in a result which needed a recount.
Overall the Liberal Democrats gained one seat and now have 24.
The Conservatives remain with 12 seats, People Against Bureaucracy remain with four seats, and one Independent seat was lost.
Turnout in Cheltenham was 37%.

20 July 2016 Last updated at 17:05 BST
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Donegal midfielder Rory Kavanagh has announced his retirement from inter-county football because of work and family considerations.
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