The Manx Missile has won 30 stages at the Tour de France, 48 across all Grand Tours, and needs four more to match the famous Belgian.
Cavendish pulled out after stage four last year following a huge crash that saw him break his shoulder.
After two high speed accidents in March the 33-year-old missed the Commonwealth Games but returned to action at the Tour de Yorkshire in May.
The 105th edition of the Tour de France starts on July 6 but before that Cavendish competes in the British Nationals on Sunday in Northumberland.
"I'm excited to be part of a strong team and I'll be looking at getting closer to that record (34) of Eddy Merckx," said Cavendish.
"I'm so excited to be able to ride the Tour de France again in my career, for the third time in Team Dimension Data for Qhubeka."
The 33-year-old lines up alongside the experienced Australian Mark Renshaw and Julien Vermote but his British team-mate Steve Cummings misses out.
Edvald Boasson Hagen, winner on Stage 19 last year, Reinardt Janse van Rensburg, Serge Pauwels, Julien Vermote, Tom-Jelte Slagter and Jay Thomson complete the line-up.
Team Principal Douglas Ryder said: "Team Dimension Data for Qhubeka is really looking forward to starting our fourth Tour de France with an incredible team that will chase stage wins and try to realise a dream.
"This year's Tour reminds me of our first Tour in 2015 with tough stages that will require strong teams to succeed and our 2018 team is totally focused on achieving the maximum we can.
"With eight rider teams this year it is imperative to get the right combinations together to achieve the big bold goals we have."