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".
Donegal midfielder Rory Kavanagh has announced his retirement from inter-county football because of work and family considerations.