The 39-year-old, who won silver in Beijing in 2008, sustained a back injury in training.
She left with a parting shot over her treatment as a cyclist.
Houvenaghel will return to dentistry, where "as a woman in my thirties, I will be treated as an equal".
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She criticised Great Britain team-mates and coach Shane Sutton when she was left out of the team pursuit races at the London Olympics two years ago.
"The past decade of my life has been dedicated to professional cycling and it has, for the most part, been extremely rewarding," she said.
"I have always dedicated myself 100% to my role as a natural professional sports person and I am immensely proud of my consistently high achievements from the beginning."
The County Londonderry native secured the Olympic silver for GB in the individual pursuit in Beijing and also won team pursuit golds at the World Championships in 2008, 2009 and 2011.
Cornwall-based Houvenaghel represented England in the 2006 Commonwealth Games before winning silver for Northern Ireland in Delhi four years later.
Houvenaghel had targeted a final podium appearance in Glasgow before ending her track career, but has been forced to withdraw citing an injury suffered in training.
"It is never easy to make the final decision to end one's sporting career," she added.
"It is disappointing to have to withdraw from competition at the Commonwealth Games. However, I would like to wish my Northern Irish team-mates every success with their performances in Glasgow.
"In the future, I hope to put something back into the sport but for now I am looking forward to pursuing my career in dentistry."
Responding to Houvenaghel's comments about sexism in cycling, former Team GB track cyclist Victoria Pendleton agreed women do receive different treatment.
The Olympic gold medallist and former world champion told BBC Radio 5 live: "The world of sport, like it or not, it still is very much a male-dominated arena to work in and it is tough at times."
Pendleton, who retired after the 2012 Olympics at the age of 31, added: "I definitely felt in my career that sometimes I wasn't necessarily as well catered for as a female, and I had to act more like a man.
"I can probably understand that she could have done with a little bit of a different support maybe."
Olympic medallist Wendy Houvenaghel has announced her retirement from cycling after pulling out of the Northern Ireland team for the Commonwealth Games in Glasgow because of injury.