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."

Speaking in Kiev, Gen Breedlove said Russian military assets being installed in Crimea would have an effect on "almost the entire Black Sea".
Mr Breedlove is in Ukraine for high-level talks with Ukrainian leaders.
Russia annexed the Crimean Peninsula from Ukraine in March 2014.
Russia's defence ministry said on Wednesday that it had deployed a batch of 14 military jets to Crimea, as part of a squadron of 30 that will be stationed on the peninsula.
An initial batch of fighter jets were flown to Crimea's Belbek air base "from military air bases in Krasnodar Territory," Russian agency Interfax reported.
Gen Breedlove had said earlier on Tuesday that a large number of Russian troops were also active inside Ukraine, training and advising separatist rebels.
Russia has continued to deny allegations from western countries that it played any direct role in the conflict in Ukraine, which has claimed more than 4,317 lives.
President Vladimir Putin said that Russia "poses no threat to anyone" and would "resist efforts to draw it into geopolitical intrigue," Russia's Tass news agency reported on Wednesday.
Meanwhile, German Chancellor Angela Merkel launched a strong attack on Russia's actions against Ukraine whilst addressing a session of parliament in Berlin.
"Nothing justifies or excuses the annexation of Crimea by Russia... Nothing justifies the direct or indirect participation of Russia in the fighting in Donetsk and Luhansk," she said, speaking in the Bundestag.
"Russia is calling into question Europe's peaceful order and it is trampling on international law."
She added that the possibility of a lasting ceasefire in eastern Ukraine was unlikely and therefore continued economic sanctions on Russia remained "unavoidable".
The US and the EU have placed sanctions on Russia for its alleged involvement in the Ukrainian crisis.
Human cost of conflict in east Ukraine
4,317 deaths since April - 957 of them since the 5 September ceasefire, and 9,921 people wounded
466,829 internally displaced people within Ukraine
454,339 refugees living abroad, 387,355 of them in Russia
UN data from 18 November
Ukraine's year of chaotic events
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.
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Nato's top military commander, Gen Philip Breedlove, has warned that Russian "militarisation" of the annexed Crimea Peninsula could be used to exert control over the whole Black Sea.