He will continue his long-shot bid for the White House.
The five-term lawmaker said illegal immigration, his core issue, now has national prominence and he doesn't need to remain in Congress to promote it.
"The issue now has a life of its own and it doesn't need one particular person to champion it," he said.
"I feel my job, my task, has been completed. And I am very much at peace with the idea that if I'm not elected president then I won't be running" for another term in Congress, he said.
His decision was first reported on the Rocky Mountain News Web site.
Tancredo, 61, is a former teacher and real estate developer who served in the Colorado Legislature in the late 1970s. He was elected to the House in 1998 in a district that includes the Denver suburbs.
He has polled in the low single digits in the crowded GOP presidential race.
In a telephone interview from Iowa, where he is campaigning, Tancredo called his presidential run an odd experience because people like his stand on immigration but support another candidate.
"So many people come up and they are applauding and screaming and hollering (for him), but they are wearing somebody else's sticker," he said.
Colorado College political science professor Bob Loevy said Tancredo's 6th Congressional District will likely remain a safe Republican seat.
"It is one of the most Republican areas" in the state, Loevy said. A Democrat has never won the seat.
Loevy said that has allowed Tancredo take a hard-line stance on immigration.
"I would argue it actually solidified his position," he said. "Someone in a safe Republican seat like that is more likely to be challenged from the right in a primary."
Tancredo said he wants to stay involved in public policy after he leaves the House.