Dean told supporters, "I am no longer actively pursuing the presidency."
"We will however continue to build our grass roots network in order to continue to change the Democratic Party and to change our country."
Dean did not say whether he plans to endorse another candidate but did say he will support the Democratic Party's nominee.
The former front-runner's withdrawal comes the day after a disappointing third-place finish in the Wisconsin primary.
Dean had earlier said a defeat in Wisconsin would mean his withdrawal, but later said supporters had asked him to stay in the race.
Dean said Wednesday he will no longer campaign but his name will remain on the ballot in states with scheduled primary elections and he urged his supporters to stay involved in the primary and to send "progressive delegates" to the Democratic convention.
Dean also cast his campaign as an ongoing movement to change the American political system.
"You have already started to change the Democratic Party and we will not stop," Dean told supporters Tuesday night. "We have a long way to go. In order to fundamentally change America we have to change Washington, the Democrats and Republicans."
In 2003 Dean stunned the Democratic political establishment by rocketing to the top of public opinion polls nationwide with a message that was harshly critical of President Bush for taking the nation to war in Iraq. His campaign was fueled by an innovative grassroots fundraising and organizing effort that effectively used the Internet to solidify what seemed to be broad, nationwide support. Dean said 300,000 people gave small donations to his campaign and that one-quarter of those who contributed were under 30 years of age.
"This campaign has been extraordinarily different," Dean said Wednesday.
Despite Dean's early strength, aggressive campaigning by his fellow candidates, some voters' negative reaction to his hard-charging style, and the capture of Saddam Hussein in Iraq seemed to erode some of his support prior to 2004's first primary contest in Iowa, where Dean finished third.
The former governor attempted to re-energize supporters after the Iowa defeat with an election night rant delivered in a fiery, growling tone. The effort backfired when the speech was harshly criticized by pundits and lampooned by political satirists and late night talk show hosts.
After Iowa the Dean campaign never regained its footing and fell into organizational turmoil with the resignation of campaign manager Joe Trippi who was later followed by other staffers, including the campaign's national chairman, Steve Grossman, the day before the Wisconsin primary.
On Tuesday Dean told supporters that they had indelibly affected the presidential race.
"You have already written the platform for the Democratic Party for this election," Dean said.
On Wednesday Dean urged supporters to continue active involvement in upcoming primary elections, to run for local office, and to stand behind the eventual Democratic nominee.
He said the Dean for America organization would continue to operate as a grassroots political movement, but Dean said he would not run as an independent or third party candidate.
"I will support the nominee of our party. I will do everything I can do to beat George W. Bush," Dean said.
Dean also said that while his organization will support the Democratic Party it will also urge the party to hold to certain "standards" and will work to change the political culture in Washington.
Dean said that his candidacy had scared those "sitting in salons in Georgetown," referring to an upscale shopping district and residential neighborhood in Washington, D.C.
"We will overcome the problems this country is facing as the result of George W. Bush and the result of a Washington establishment who has forgotten who sent them there," Dean said.
Though he did not say whether he will endorse another Democratic candidate, he will reportedly meet with Sen. John Edwards, D-N.C., later this week and has plans to talk to Sen. John Kerry, D-Mass., the current Democratic front-runner.