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".

Trump says deal reached to disarm Hamas, Israeli support for plan remains uncertain
Kuwait intercepts hostile drones after attacks on vital, military sites
India approves 3.16 trillion rupees for farmer cash scheme through 2031
4 bodies located after 10 climbers go missing on Pakistani mountain
