"Though it is difficult to accept, it is clear to me now that this campaign does not have the means to move forward successfully," Xinhua news agency quoted the former Congressman as saying on Friday.
"My service to the country will not be as a candidate or as the nominee."
O'Rourke, 47, served in the House of Representatives from 2013 to 2019.
A local from the Texan border city of El Paso, O'Rourke ran unsuccessfully for Senate in the 2018 mid-term elections against incumbent Republican Ted Cruz, in a competitive campaign that had elevated the challenger's national profile.
But O'Rourke's presidential campaign, which kicked off in March with much fanfare, has recently struggled to gain traction in a crowded Democratic field, amid fundraising woes. Poll numbers have also put him well behind top-tier contenders.
He mounted an effort in August to reboot his candidacy after a deadly mass shooting in El Paso killed 22 people by making progressive gun control measures a campaign signature but was called out by conservatives, including President Donald Trump.
O'Rourke is the latest Democratic hopeful to end a presidential campaign, leaving 17 party candidates still in the race.
According to a RealClearPolitics average of recent polling, former Vice President Joe Biden is currently leading at 26.7 per cent, trailed by Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, with 21.3 per cent and 16.3 per cent, respectively.
The latest New York Times-Siena College poll released on Friday showed that Warren is currently leading in Iowa, an early voting state, and is holding a slim lead over Sanders.
Biden has fallen to the fourth place behind Pete Buttigieg, Mayor of South Bend, Indiana, who ranks third at 18 per cent, according to this poll.
( With inputs from IANS )