President Francois Hollande said he did not want "France to be exposed to risks which would cost it dear".
French President Francois Hollande will not be seeking a second term in office next year after acknowledging his unpopularity in the country.
Hollande made the surprise announcement in a televised address on Thursday, days after his closest aides said he would compete in the elections.
"I have decided not to be a candidate in the presidential election," Hollande said.
Hollande repeatedly said he would seek re-election only if he was able to curb the unemployment rate, which has hovered for years at 10 percent.
His decision makes way for another leftist candidate to take on conservative Francois Fillon and far-right leader Marine Le Pen.
"I am aware today of the risk that going down a route that would not gather sufficient support would entail, so I have decided not to be a candidate in the presidential election," a sombre-looking Hollande said in his address from the Elysee Palace in Paris.
Dogged by high unemployment, Hollande is the least popular president in French polling history.
"In the months to come, my only duty will be to continue to lead my country," the 62-year-old said.
"I do not want France to be exposed to risks which would cost it dear, and even threaten its unity, its cohesion, its social balance."
Manuel Valls, who had been a loyal prime minister to Hollande until recently is expected to throw his hat in the ring.
The past two weeks have turned French politics on its head. First former president Nicolas Sarkozy was knocked out of the conservatives' primary, and then runaway favourite Alain Juppe was beaten to the party's nomination by Fillon.
Hollande took office in 2012 promising to be "Mr Normal" after the term of flamboyant and mercurial Sarkozy.
But his tenure has been anything but ordinary.
France has faced three major terror attacks -- firstly against Charlie Hebdo magazine in January 2015, then in Paris the following November and in Nice in July.
Grassroots supporters were further alienated by a pro-business switch in 2014, a wavering over security reforms, and by labour laws that brought thousands out onto the streets in protests early this year.