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Cavendish, who was second in the omnium on the track in Rio, has 10 stage victories to his name in the race, to go with 30 Tour de France stage wins.
Also confirmed are German sprint rival Andre Greipel, and twice Tour of Britain runner-up Steve Cummings.
The eight-stage race starts in Glasgow and finishes in London.
In between, the race will visit Cumbria, Cheshire, Wales and Dartmoor before Bristol hosts stages seven a and b - an individual time trial and circuit race.
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Cavendish, 31, who will also compete in the World Road Race Championships in Qatar in October, joins compatriot Cummings in Team Dimension Data.
Germany's Greipel, who rides for Lotto Soudal, won three stages in 2010, one in 2015 and won the final stage of this year's Tour de France.
Australia's former world hour record holder Rohan Dennis will line up for BMC Racing Team alongside American Taylor Phinney, a world champion on both the road and track who raced in the Tour of Britain last year.
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Tour of Britain route:
Stage one: Sunday, 4 September - Glasgow to Castle Douglas
Stage two: Monday, 5 September - Carlisle to Kendal
Stage three: Tuesday, 6 September - Congleton to Tatton Park, Knutsford
Stage four: Wednesday, 7 September - Denbigh to Builth Wells
Stage five: Thursday, 8 September - Aberdare to Bath
Stage six: Friday 9, September - Sidmouth to Haytor, Dartmoor
Stage seven a: Saturday, 10 September - Bristol Stage Individual Time Trial
Stage seven b: Saturday 10, September - Bristol Stage Circuit Race
Stage eight: Sunday 11, September - London Stage presented by TfL
Olympic silver medallist Mark Cavendish is returning to the road to ride in the Tour of Britain, which will take place between 4-11 September.