"This has been a very difficult decision for me and my family and I know for some of you it has been a disappointment," Graham said. But he added, "This is not the end."
Graham said he wants to continue his public work, including creating an institute to train future Florida leaders and helping to improve national security. He also wants to spend more time with his wife, Adele, children and grandchildren.
The decision further complicates Democrats' hopes to regain control of the Senate, where Republicans hold a 51-48 majority, with one Democratic-leaning independent.
Graham is the fourth Southern Democrat to announce plans to retire at the end of his term, giving Republicans opportunities for strong gains in a region of the country where President Bush figures to run strongly in 2004. Sens. Zell Miller of Georgia, John Edwards of North Carolina and Ernest "Fritz" Hollings of South Carolina earlier said they wouldn't seek re-election to the Senate.
"Democrats, all Floridians, will be sad to see him go, but we know he stands ready to continue to serve America and Florida," Florida Democratic Party Chairman Scott Maddox said after learning of Graham's decision.
Graham's chief of staff notified the other Democratic campaigns shortly before the senator made the announcement.
Five Democrats had declared for Graham's Senate seat but said they wouldn't challenge Graham if he sought re-election: U.S. Reps. Allen Boyd, Peter Deutsch and Alcee Hastings, Miami-Dade Mayor Alex Penelas and former state Education Commissioner Betty Castor.
The field of Republicans seeking the seat include state House Speaker Johnnie Byrd, former U.S. Rep. Bill McCollum, legal activist Larry Klayman and state Sen. Dan Webster.
While the state GOP said Graham's presidential campaign might have made him vulnerable, analysts considered the popular former Florida governor a strong candidate for re-election.
In the Senate, Graham has built a reputation for a low-key, methodical approach to legislation, and served last year as chairman of the Senate Intelligence Committee, where he was at the forefront of the debate over the nation's preparedness against terrorism.
Graham, who turns 67 on Sunday, delayed his entry into the presidential contest to recover from major heart surgery in January. Then based much of his campaign on his vote against the military conflict in Iraq.
He accused President Bush of endangering Americans by abandoning the fight against terror to wage war in Iraq, which he said did not pose an immediate threat to the United States.
He went so far as to suggest impeachment, saying in July: "If the standard of impeachment that the Republicans set for Bill Clinton — a personal, consensual relationship was the basis for impeachment, would not a president who knowingly deceived the American people about something as important as whether to go to war meet the standard of impeachment?"
Graham is widely considered one of the most popular politicians in Florida. He hasn't faced a serious challenge since defeating Sen. Paula Hawkins to win the seat in 1986.