Obama had defiantly declared he would chose her for secretary of state regardless of the political criticism, if he wanted, but such a choice could have gotten his second term off to a turbulent start with Capitol Hill.
In a letter to Obama, Rice said she was convinced the confirmation process would be "lengthy, disruptive and costly." The letter was part of a media rollout aimed at upholding her reputation. It included an NBC News interview in which she said her withdrawal "was the best thing for our country."
Rice may end up close to Obama's side in another way, as his national security adviser should Tom Donilon move on to another position, though that is not expected imminently. The security adviser position would not require Senate confirmation.
Rice would have faced strong opposition from Senate Republicans who challenged her much-maligned televised comments about the cause of the deadly raid on the U.S. Consulate in Benghazi, Libya.
Her efforts to satisfy Sens. John McCain, Lindsey Graham, Kelly Ayotte and Susan Collins in unusual, private sessions on Capitol Hill fell short. The Republicans emerged from the meetings still expressing doubts about her qualifications.
"The position of secretary of state should never be politicized," Rice said. "As someone who grew up in an era of comparative bipartisanship and as a sitting U.S national security official who has served in two U.S. administrations, I am saddened that we have reached this point."
Attention now shifts to Kerry, who came close to winning the presidency in 2004 and has been seen as desiring the State job. In a statement, he made no mention of his own candidacy but praised Rice, who was an adviser to him his in his presidential bid.
Kerry was an early backer of Obama and was under consideration to become his first secretary of state. Obama has dispatched Kerry to foreign hot spots on his behalf. Kerry played the role of Republican Mitt Romney during Obama's presidential debate preparations this year.