The 30-year-old Manxman initially remounted after crashing about 20km into the sixth stage of the race from Stoke to Nottingham before pulling out.
His Etixx-Quick-Step team believe he hit a parked car, injuring the same left shoulder he dislocated during the 2014 Tour de France.
Cavendish sustained bruising but no fracture or dislocation of the joint.
But he will require several days of rest before being able to resume training.
The crash came on the day he was named in Britain's team for this month's UCI Road World Championships, which start next weekend.
But the men's road race is over a fortnight away on Sunday, 27 September, and Cavendish's team believe it is still possible he will be able to compete in the event in Virginia, the United States.
Friday's sixth stage - a 192.7 km route across the Peak District National Park - was won by Cavendish's Etixx-Quick-Step team-mate Matteo Trentin.
The Italian rider beat Edvald Boasson Hagen (MTN-Qhubeka) as the duo battled for the stage win.
Norwegian Boasson Hagen, the 2009 Tour of Britain winner, earned enough bonus seconds to enhance his overall lead to 13 seconds ahead of the final two stages this weekend.
Saturday's 227.1km seventh stage from Fakenham to Ipswich is likely to be the final chance for Boasson Hagen's rivals - chiefly Team Sky's Wout Poels - to dethrone him as Sunday's finish in central London is expected to end in a sprint.
"Stoke and Nottingham are only 50 flattish miles apart if you go via the A50; do it via Buxton, Hathersage and Bakewell and it could just break you.
"The day's victor Matteo Trentin, who has also won two Tour de France stages, said it was the hardest ride of his career.
"There may be a hint of hyberbole to that - forgiveable given the way he resisted a very elite chasing group and surged past Edvald Boasson Hagen at the death - but I cannot remember a day at the Tour of Britain when the main bunch came in 45 minutes later.
"It was a third win this week for the Etixx-Quick-Step team and it came on the day they lost their third rider, Britain's Mark Cavendish. It seems his injuries are not as serious as first feared.
"And for Boasson Hagen there is the consolation that despite Team Sky's best efforts he has almost certainly wrapped up the overall win."
Stage 6 result
1. Matteo Trentin (Ita/Etixx-Quick-Step) 4hrs 45mins 27secs
2. Edvald Boasson Hagen (Nor/MTN-Qhubeka) same time
3. Owain Doull (GB/Team Wiggins) +4secs
4. Zdenek Stybar (Cze/Etixx-Quick-Step) same time
5. Jens Debusschere (Bel/Lotto Soudal) same time
6. Alberto Bettiol (Ita/Cannondale - Garmin) same time
7. Alex Peters (GB/Great Britain) - same time
8. Dylan Teuns (Bel/BMC Racing Team) same time
9. Xandro Meurisse (Bel/An Post-Chainreaction) same time
10. Wouter Poels (Ned/Team Sky) same time
General classification
1. Edvald Boasson Hagen (Nor/MTN-Qhubeka) 27hrs 47mins 54secs,
2. Wouter Poels (Ned/Team Sky) at 13 secs,
3. Rasmus Guldhammer (Den/Cult Energy Pro Cycling) +43secs
4. Owain Doull (GB/Team Wiggins) +44secs,
5. Dylan Teuns (Bel/BMC Racing Team) +51secs
6. Zdenek Stybar (Cze/Etixx-Quick-Step) same time
7. Ruben Fernandez (Spa/Movistar) same time
8. Steven Kruijswijk (Ned/Team LottoNL-Jumbo) same time
9. Xandro Meurisse (Bel) An Post - Chainreaction same time
10. Chris Anker Sorensen (Den/Tinkoff-Saxo) same time
Selected Others:
17. Peter Kennaugh (GB/Team Sky) +1:45
92. Bradley Wiggins (GB/Team WIGGINS) at 1:26:56
Mark Cavendish was taken to hospital with a shoulder injury after crashing out of the Tour of Britain.