"I informed Governor Paterson today that for personal reasons I am withdrawing my name from consideration for the United States Senate," Kennedy wrote in a statement released just after midnight Thursday.
CBS News' Steve Chaggaris confirmed Kennedy's withdrawal before 10 p.m. Wednesday night, despite widespread, conflicting reports.
The New York Post is reporting that Kennedy decided to withdraw "after learning that Gov. David Paterson wasn't going to choose her" and cited sources who said that Paterson soured on her due to her "poor performances in media interviews and in in [sic] private sessions with various officials."
The New York Times, in contrast, says that Kennedy's decision is linked to concerns about the health of her uncle, Sen. Ted Kennedy of Massachusetts.
Sen. Kennedy was diagnosed with a malignant brain tumor last May, underwent surgery and returned to the Senate in November.
He suffered a seizure during inauguration festivities yesterday and was admitted to the hospital. Doctors later said that the seizure was brought on by stress. He left the hospital today.
There was a five-hour window of confusion Wednesday night about Caroline Kennedy's stance on the possible Senate appointment. New York City newspapers began reporting her withdrawal around 7 p.m., but NBC News reporter David Gregory said repeatedly on air that the reports were mistaken.
The Associated Press, which had initially reported Kennedy's withdrawal, reversed course and released a 730-word story stating that, "After wavering briefly, Caroline Kennedy renewed her determination Wednesday to win appointment to the U.S. Senate."
Both Kennedy and Paterson's spokespeople did not comment until the statement was released after midnight.
Kennedy informally campaigned in New York.
Her reversal comes just days before Paterson is expected to announce his pick for the seat.
Others contenders for the seat include New York Attorney General Andrew Cuomo, the son of former Gov. Mario Cuomo, Nassau County Executive Tom Suozzi of Long Island, and Reps. Carolyn Maloney, Steve Israel, Jerrold Nadler, Kirsten Gillibrand and Brian Higgins.
Another, albeit somewhat less likely, scenario is that Paterson could appoint a "caretaker" to the seat -- an experienced politician such as former President Bill Clinton, who has no intention of running to retain the seat.
Whoever is appointed will serve until 2010, when New York will hold a special election for the seat. The seat will be up for election again in 2012 -- the end of the six-year term Hillary Clinton won in 2006.