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".

Five dead as Mexican plane crashes off Texas coast
Two killed in underground explosion at Polish coal mine
Netanyahu to discuss Iran, next phase of Gaza plan with Trump
US President unveils 'Trump-class' battleships
Cambodia, Thailand to hold talks on resuming Trump's truce
Trump appoints envoy to Greenland, stirs backlash
Passenger bus crash in Indonesia kills at least 16 people
Japan prepares to restart world's biggest nuclear plant
