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 he paused attack on Iran as negotiations continue
Pakistan sends new Iranian peace proposal to US
Protests erupt over Kenya fuel price hikes, strike strands commuters
Philippines opens impeachment trial of VP Duterte amid political turmoil
At least 9 killed in southwest China after truck falls into river in heavy rain
