The move will allow the Scottish firm to concentrate on its housebuilding and property development divisions.
Founder and chairman Alan Macdonald said the move will cut the company’s workforce from 130 to about 70.
The firm said the move was down to a “severe slowdown in the main contractor market” and “unsustainable” profit margins in general construction.
The exit from general construction will take 12 to 15 months as current contracts are built-out.
Macdonald said Dawn Group would meet all of its contractual obligations and settle accounts with all of its suppliers.
Macdonald told the Herald Scotland: “Currently, all areas of the business are profitable and turnover is around £105m in the year to January 31, 2012.
“However, the board has taken a strategic decision to carry out a planned and orderly closure of our construction division, due to increasingly challenging market conditions, where margins are unsustainable.
“This will be a well-managed exit from the market and we will fulfil all contractual obligations, complete all ongoing projects and settle accounts with all our suppliers during what will be a 12 to 15-month process.
“It’s regrettable that we’ve come to this conclusion, but we see the main contractor market coming under increasing pressure for the next five years and it is the responsible course of action to implement this strategy now, given the current strength and robustness of the business.
“We have a very proud and jealously-guarded reputation which we’ve built up over the past 40 years, and it’s important to me personally and for the business as a whole that we manage this professionally and look after our staff, customers and contractors properly.”