"I am no longer actively pursuing this candidacy," Dean said at a rally in Burlington, Vt., but pledged to continue "the effort to transform the Democratic party and to change our country."
He called on his delegates and supporters in future primary states to carry his message forward to the Democratic convention.
The move follows Dean's distant third-place finish in Tuesday's Wisconsin primary. Frontrunner John Kerry won with 40 percent and John Edwards was second with a surprisingly strong 34 percent. Dean had 18 percent.
Before Wisconsin voted, Dean aides said the former Vermont governor was torn between accepting the inevitable — that he was effectively out of the race — and a devotion to his cause and supporters.
Dean broke the news of his departure to his loyalists by highlighting their impact on the race.
"This has been a campaign that has been extraordinary different — a new approach, planting seeds on the Internet, strengthening grassroots," Dean said. "All these steps can revitalize our democracy and return power to ordinary Americans."
"All of us have done these things together," he continued. "We have demonstrated to other Democrats that it is a far better strategy to stand up against the right-wing agenda of George W. Bush than it is to cooperate with it."
"We have led this party back to considering what its heart and soul is," he said.
Dean thanked the Service Employees International Union and International Brotherhood of Painters for backing him, but not the American Federation of State, County and Municipal Employees, the union that endorsed Dean but then withdrew its support.
He also thanked his wife, Dr. Judith Steinberg, whose absence from the campaign was made an issue, for "promoting the debate over whether a woman needs to gaze adoringly at her husband or follow her own career."
Dean noted that his name was on the ballot in future primary states and hinted that votes for him would pressure the Democratic party. But he made clear than he would not run as a third party candidate, and would support the eventual nominee.
"This is the end of phase one of this fight but the fight will go on, and we will be together in that fight," he said.
Historians will judge, but Dean and his devoted supporters are convinced that they more than anyone else defined the Democratic debate through his unwavering criticism of Mr. Bush, the Iraq war and Democrats who helped Mr. Bush push his agenda through Congress.
From virtual nobody to front-running Internet whiz to screaming voice of defiance to also ran, Dean has had more highs and lows in a year than most politicians experience in an entire career.
As he left the Vermont governor's office in January 2003 after nearly 12 years, Dean had a presidential campaign staff of a half-dozen and about $157,000 in the bank.
But one of those staffers had found a then-obscure Internet organizing site, known as MeetUp.com. Dean became the first political candidate to sign up for it and suddenly thousands of people were finding him, organizing local events and fund-raisers and slowly making him a force.
His blunt speaking style and full-throated opposition to the Iraq war — at a time when almost all of the other major contenders were trying to explain their support for it — gave him an edge.
By February last year, he had begun focusing his criticism not just on Mr. Bush but on his fellow Democrats, accusing them of being too timid in fighting for the party's core principles.
"I'm Howard Dean and I represent the Democratic wing of the Democratic Party," Dean declared at a Democratic National Committee meeting in Washington last year that caught everyone's attention.
Dean tapped into Democrats' nagging belief that their national leaders had lost their way and were too blindly allowing Mr. Bush and the Republicans to set the agenda.
When he made missteps, his supporters were emboldened. After Dean's performance on NBC's "Meet the Press" last June was widely panned, supporters decided to prove the establishment wrong, raising more than $3 million over the Internet in just a week.
Suddenly, Dean appeared to be the man to beat. His opponents stepped up the criticism. Dean stirred controversy in November for saying he wanted "to be the candidate for guys with Confederate flags in their pickup trucks."
But then he then he won the endorsement of two of the country's largest unions — AFSCME and the SEIU — and snagged one of the biggest prizes — the backing of former Vice President Al Gore, the nominee in 2000.
Days before the Iowa caucuses, 4-year-old tapes surfaced of Dean telling Canadian television that caucuses are dominated by special interests. He doused that firestorm quickly by winning the endorsement of Iowa Sen. Tom Harkin.
But while it always appeared that Dean could emerge unscathed from the missteps, ultimately, it added up and voters decided to go with a familiar Washington face.
By the time the Iowa votes were counted, Dean had finished a distant third behind Kerry and Edwards. It was the first election loss of his 20-year career. Then Dean ended his full-throttle concession speech with a scream that has played endlessly on the Internet and late-night talk shows.
A decent second-place showing in New Hampshire kept hope alive, but Dean faltered in the few Feb. 3 primaries where he had once been competitive. He all but gave up on Washington, Michigan and Maine, and paid little attention to Virginia or Tennessee.
He declared Wisconsin a "must-win" state, then hedged his bets. But a third-place finish there finally made the odds too high for a candidate who had consistently defied them.