Campaign spokesman Matt Burns says the State Assemblywoman thinks dropping out of the 23rd Congressional District race is in the best interests of the party.
The announcement comes after a Siena College poll found she was in third place with 20 percent of the vote in the heavily-Republican district, while Hoffman and Democratic nominee Bill Owens were too close to call, with 35 percent and 36 percent, respectively.
The election is to fill the House seat vacated by Republican Congressman John McHugh, who was appointed by President Obama to become Secretary of the Army.
The election is Tuesday.
Quickly after Scozzafava's announcement, Republican National Committee Chairman Michael Steele said the RNC is endorsing Hoffman, saying the change of course is effective immediately and will include financial backing and get-out-the-vote efforts for the Conservative Party candidate.
Steele called Scozzafava's move a "selfless act."
The race has pitted conservative and moderate wings of the Republican Party as political leaders seek to stake out the future of the GOP. Some are pushing for an inclusive, moderate future, while the more conservative wing is willing to risk a Democratic win to send a message to Washington.
Scozzafava's critics said she's too moderate, even liberal.
"Conservative Republicans will undoubtedly claim victory in sidelining the moderate GOPer Scozzafava," said CBS News' director of political coverage Steve Chaggaris.
"This has been a big fight among Republicans over the past few weeks, with prominent Republicans such as Sarah Palin and Tim Pawlenty coming out in favor of the third-party candidate Hoffman, and Newt Gingrich supporting the GOP-backed Scozzafava."
Scozzafava had also received an endorsement from the National Rifle Association.
Other Republicans who have endorsed Hoffman include former N.Y. Governor George Pataki, former Sen. Fred Thompson (R-Tenn.), former House Majority Leader Dick Armey (R-Texas), and former presidential candidate Steve Forbes.
CBS News chief political consultant Marc Ambinder said Republicans will derive two lessons from the results of this race: "One is that the activist base of the party is becoming increasingly powerful in the one area that had eluded them: candidate selection. Other conservative Republicans may now feel more comfortable if they decide to challenge incumbents in primaries."
The second lesson, Ambinder says, is that "populist, regular-guy candidates can win in supposedly 'moderate' districts."
He also said Democrats will take the sidelining of Scozzafava as a positive trend for the long-term, believing that the Republican Party will conservatize itself to death demographically.
"I'm fighting for the heart and soul of the Republican Party," Hoffman told The Associated Press last week. "I believe the people in Washington, and the overwhelming response that I've been getting nationally from individuals, is showing that a lot of people feel like it's time for the Republican Party to go back to its base."
In response, Scozzafava spokesperson Matt Burns last week characterized Hoffman's supporters as carpetbaggers: "Everybody who has endorsed Doug Hoffman has something in common with him, and that is that none of them live in the district."