Heather Nauert withdrew her name from consideration on Saturday amid concerns about her qualifications for the post.
In a statement, Nauert, a former Fox News presenter, said the decision was made "in the best interest of my family".
She was set to replace Nikki Haley, who announced in October that she would step down from the post by the end of the year.
Critics had highlighted Nauert's lack of adequate foreign policy experience or political skills that was needed for the job.
While making his announcement last December, US President Donald Trump had described Nauert as "very talented, very smart, very quick".

Explosion hits US embassy in Oslo, causing minor damage, thick smoke
Four killed in Beirut hotel strike, Israel says it targeted Iranian commanders
Drone attacks cause major fire at Kuwait International Airport
Israel warns Lebanon of 'heavy price' as week's death toll nears 300
Trump rejects settling war with Iran
