Daley announced his decision during a press conference at City Hall.
"Now I am ready with my family to begin a new phase of our lives," Daley said, noting that he had considered the decision over the course of the last several months.
"I have always believed that every person, especially public officials, must understand when its time to move on," Daley said. "For me, that time is now."
Daley was elected mayor on April 4, 1989, to complete the term of the late Harold Washington, and was re-elected in 1991, 1995, 1999, 2003 and 2007 according to his biography.
Daley is the son of Richard J. Daley, who served as the city's mayor between 1955 and 1976.
The Chicago mayoral general election will be held February 22, 2011.
White House Chief of Staff Rahm Emanuel has in the past expressed interest in the job, telling Charlie Rose of PBS in April that, "[O]ne day I would like to run for mayor of the city of Chicago. That's always been an aspiration of mine even when I was in the House of Representatives."
In a statement released Tuesday, Emanuel did not indicate whether he will pursue the seat, but did say he was surprised by Daley's decision.
"While Mayor Daley surprised me today with his decision to not run for reelection, I have never been surprised by his leadership, dedication and tireless work on behalf of the city and the people of Chicago," Emanuel said.
With the election to be held early next year, Emanuel will have to decide quickly whether to stay at the White House or launch a bid for the office.
A source close to Emanuel tells CNN's National Political Correspondent Jessica Yellin that it's complicated. He takes his job seriously and feels a responsibility to see out his duties serving the President during difficult times.
The source added that he will probably look at the open seat as an option but has some time to make the decision.
But one group of progressives is already announcing their opposition to Emanuel.
The Progressive Change Campaign Committee circulated a petition shortly after Daley's announcement from Illinois voters who say they will "not to support Rahm Emanuel in any future election."
President Obama, a native of Chicago, praised Daley in a statement released Tuesday afternoon by the White House.
"No mayor in America has loved a city more or served a community with greater passion than Rich Daley. He helped build Chicago's image as a world class city, and leaves a legacy of progress that will be appreciated for generations to come."
– CNN's Jessica Yellin, Mark Preston, Adam Levy and Robert Yoon contributed to this report
Updated 5:36 p.m.
"I hope Mayor Daley seeks reelection. I will work and support him if he seeks reelection but if Mayor Daley doesn't, one day I would like to run for mayor of the city of Chicago.” Make way for Mayor Rahm Emanuel!
Another Democrat bites the dust!
Good Daley is another Democratic Crook!
That is not good news for Chicago. I believe because he had low poll ratings he decided not to run again. And what Chicago does not need is Emmanuel as Mayor. Let him stay in Washington with Obama. Maybe William Daley will run for mayor as he knows the city very well himself. Also, since Daley's wife has cancer it might be better for him to be at home with her instead of at City Hall. I wish both the Mayor and his wife the best.
"I have always believed that every person … must understand when to move on," Daley said (25 years too late).
There are not many people that could run this city like the Daley's. I voted for his father in 1955 and he was great. He really knew how to run Chicago. Richard M. Daley learned from his father and I believe he did a good job for the city. I will only vote for mayor depending upon who is running. I basically prefer another Daley. Since it looks like the republicans are going to win the house don't be surprised if a republican campaigns for mayor. The best governors this city had was Jim Thompson and Jim Edgar and they were republican.
O.K. Mr. Emanuel – The path is clear.
You did not do a good job for Obama. As a matter of fact, everything
So go to Chicago.
He wants Blago's old job!
Yes, when you can't stuff any more money in your pockets, down your shirt and in your pants, it's time to retire... It's Chicago. Roll in the next corrupt DemocRAT to replace him...
Finally...this guy is a loser, and the Daley machine will continue to run Illinois!
Jumping ship before it sinks.........another weak-spined libtard.
Maybe Mayor Daley is seeing the handwriting on the wall?
Why is he running for governor?
Wow, a king surrendering his crown. Oh, that he would have left the city in good financial shape, instead of all the insider deals.
Christmas has come early to Cook County! May ye never be heard from again you scurrilous, corrupt, thieving swine. Illinois will benefit as well with his departure. I haven't been this happy and full of hope for the future since ...ever.
He and his Dad were the best thing that ever happened to Chicago. They both were responsible for making Chicago a world class city. Your contributions to the city will always be remembered and greatly appreciated. Thank you
Good leave. Chicago wake up and elect a Republican look at how bad things have been for you since this buffoon was Mayor. Time to give Chicago a chance.
Its good to hear that there will be continuity in this job. We'll be replacing one crook with another. Make sure Rahm keeps those dead people voting on the Democratic ticket!
Chicago is going to miss Richie. Really, he has been the best mayor of any American city and we've had him for all these years...
I lived in Chicago from my birth until the mid 1980s when I moved to the western suburbs and then to Georgia in 1989. I enjoyed the time under “Da Boss” and while his son, Richie, was never “Da Boss” because times had changed, with his ideas about firearm control which was contrary to our civil rights as held by the U.S. Supreme Court just this year, I feel Richie did a good job as Chicago mayor. Keeping up to date on the happenings in the city by WGN-TV and the various web sites, and my family and friends who still live in the area, I heard good and bad about Richie. However, again with the exception of his stand on guns, most everyone felt he did a good job.
I wish to thank Richie for serving the City of Chicago which I will always consider my home and wish him and his family, especially his wife who is very ill, all the best.
Aww I'll miss you! Thank you for your great service.
Hey Rick, ask this "cotton picking" mayor why he doesn't want to run again.
Maybe the next chicago mayor won't be so corrupt. Ohh wait I just woke up, what am I thinking ha ha
In other words he has skimmed enough money from the taxpayers of Chicago that he will retire. He has made himself into a very rich man exploiting the city of Chicago.