"I apologize for what I have caused," Craig said, his wife Suzanne and two of their three children at his side with a historic Boise train station as backdrop. "I am deeply sorry."
Craig, 62, said he would resign effective Sept. 30, ending a career in Congress spanning a quarter-century.
Making no specific mention of the incident that triggered his disgrace in his remarks, he spoke for under six minutes and took no questions.
Among those attending was Republican Gov. C.L. "Butch" Otter, who will appoint a successor for the remaining 15 months of Craig's term.
It was a relatively quick end to a drama that began Monday with the stunning disclosure that Craig had pleaded guilty to a reduced charge following his arrest June 11 in a Minneapolis airport men's room.
Craig at first tried to hold on to his position, contending in a public appearance on Tuesday that he had done nothing inappropriate and that his only mistake was pleading guilty Aug. 1 to the misdemeanor charge.
"In his 27 years in Congress, Craig has been a staunch conservative," reports CBS News correspondent Dan Raviv. "Among other issues, he supported a constitutional ban on same-sex marriage and voted against expanding hate-crime laws to include 'sexual orientation.'"
Raviv adds, "Craig was a loyal Republican, but top Republicans didn't give him an ounce of support this week."
Rather, a growing chorus of leading GOP leaders called for him to step down, to spare the party further embarrassment and possible harm in next year's elections.
"The last thing the Republicans want is to even move into this process - which is starting early - with this overhang of a possible sex scandal," CBS News chief political analyst Jeff Greenfield said. "On top of the fact that they've got an unpopular president, a divisive war, they've got 22 to 34 seats to defend. They've got enough on their plate."
The prospect of Craig's resignation was met with approval by Idahoan Don Cornell, who told CBS News, "We're hoping for it. He hadn't been up-front, totally. And If he'd been up-front totally maybe it wouldn't be such a big deal."
Cornell said he was never a big supporter of Craig, but he told CBS News correspondent Stephan Kaufman that no matter what Craig might be guilty of, he should still stand up for what he feel is right.
"Maybe he should fight it," Cornell said. "Maybe he was entrapped a bit, who knows? If it was my credibility on the line I probably wouldn't cave in like that."
But Cornell admitted that perhaps it was time for Craig to leave, given the damage to his credibility.
Otter said Saturday he has not chosen a replacement, although several Republicans familiar with internal deliberations said he favored Republican Lt. Gov. Jim Risch.
Otter called speculation that he has made a choice "dead wrong" and declined to say when he would fill the seat.
Craig said he would remain in the Senate until Sept. 30 in hopes of providing a smooth transition for his staff and whoever is chosen as his successor.
President Bush called Craig from the White House after the senator's announcement and told him he knew it was a difficult decision to make, said White House spokesman Scott Stanzel.
"Senator Craig made the right decision for himself, for his family, his constituents and the United States Senate," Stanzel said.