"It's the right thing to do," he told The Associated Press about his decision not to seek a fourth term next year as the governor of New York.
When asked about a possible presidential run, Pataki, 60, said "That's for down the road. I'm not ruling anything in or out, but my goal is to be the best governor I can be for the next year and a half."
Recent polls in New York had shown Pataki trailing Democratic Attorney General Eliot Spitzer in a possible 2006 gubernatorial matchup and the governor's approval rating had slipped to an all-time low among New York voters earlier this year.
Pataki said he felt it was the "right time" to step aside.
Pataki brought down Democratic icon Mario Cuomo in 1994 and helped pull New York through the horror of the Sept. 11, 2001, terrorist attacks.
"We've been through very tough times since 2001 and now I can look at the future of the state with the confidence that you should have," he said.
Sen. Hillary Rodham Clinton, considered a front-runner for the 2008 Democratic presidential nomination, praised Pataki for his "years of work and dedication to the people of New York and wish him and his family the best."
The governor was to meet with top financial supporters, who could bankroll a presidential bid, in New York City on Wednesday night.
Pataki had been under pressure from some fellow Republicans and others to make a decision about his re-election intentions to give the party a chance to be competitive against the high-profile Spitzer.
Melding a liberal social agenda that included support for gay and abortion rights with a tax-cutting, tough-on-crime conservatism, Pataki easily won re-election in 1998 and 2002 in a state where there are 5 million Democrats and 3 million Republicans.
In 1999, Pataki flirted with a possible run for the Republican presidential nomination, but finding few takers he quickly threw his support to George W. Bush.
A year ahead of Bush at Yale University during their undergraduate years, Pataki was included on the Texas governor's short list of potential running mates in 2000.