The 33-year-old has written to the Hyderabad Cricket Association (HCA), saying his decision to retire was an emotional one and that he is available for selection.
In an email sent to HCA's CoA on Thursday, Rayudu wrote, "I would like to bring to your notice that I would like to come out of retirement and play cricket in all formats."
"I want to take this opportunity to thank Chennai Super Kings, VVS Laxman and Noel David, who have been very supportive during the tough time and are instrumental in making me realise that I have enough cricket left in me.
"I am looking forward to a wonderful season ahead with a very talented Hyderabad team and help the team realise its full potential. I will be available from September 10 to join the Hyderabad team," he added.
The HCA's CoA subsequently sent out a mail saying, "This is to inform you that Rayudu has withdrawn his announcement of retirement and has made himself available for the shorter format of the game for HCA for 2019-20."
During the course of the World Cup in England, Rayudu had announced his retirement after he wasn't chosen as a replacement for the injured Shikhar Dhawan despite being named one of five stand-bys for the quadrennial event.
Initially, the 33-year-old was not included in the 15-member India squad for the World Cup because of not having a "three-dimensional" game and Vijay Shankar was preferred over him. After the snub, Rayudu had tweeted sarcastically "Just ordered a new set of 3D glasses to watch the World Cup," aimed at chief selector MSK Prasad.
Last year, the middle-order batsman had announced his retirement from first-class cricket in order to focus on his limited-overs career.