Chafee, 76, said he will not seek a fifth term in 2000.
"It's time to try something else," Chafee said at a news conference at the Rhode Island State House.
Chafee was flanked by his wife, by his children and grandchildren, and by Gov. Lincoln Almond, like Chafee a Republican.
A native of Providence and a scion of one of Rhode Island's most powerful families, Chafee is perhaps the most popular Republican in the history of this overwhelmingly Democratic state.
In addition to his Senate service, his political resume includes six years as governor, 3 and 1/2 years as secretary of the Navy, and six years as a state representative.
Considered one of the Senate's most liberal Republicans, Chafee has earned high praise from both the American Civil Liberties Union and the U.S. Chamber of Commerce during his tenure.
Republicans now hold a 55-45 edge in the Senate, but must defend 19 seats next year, compared with 14 for the Democrats. The 19 GOP seats include many held by first-termers who were pulled into office on the strength of the GOP landslide in 1994.