Ivo Sanader announced the move at a news conference in Zagreb
Croatian Prime Minister Ivo Sanader has announced he will resign and withdraw from politics.
"I have decided to withdraw from active politics and not to run for the presidency," Mr Sanader said.
The announcement came as a surprise. Croatian media had speculated recently that Mr Sanader, 56, would run for president next year.
The leader of the conservative Croatian Democratic Union (HDZ), Mr Sanader had been prime minister since 2003.
But he told reporters at a news conference in the capital, Zagreb: "My job has been done, my political life ends now."
He said he was not resigning because of illness or to take up a post at the European Union.
Mr Sanader stressed that he "did not make these decisions easily" but after "deep consideration".
"I have always said that politics is not an end in itself."
Mr Sanader, who won a second term in office in November 2007, had made gaining Croatian membership of Nato and the European Union a key part of his time in office.
He said he was leaving his post "satisfied because the strategic goals have been achieved."
Croatia joined Nato in April this year but accession to the EU has stalled over an unresolved border dispute with neighbouring Slovenia.
Mr Sanader said Croatia was "on the doorstep" of EU membership and only awaiting a "political decision".
State media reported that Mr Sanader recommended his deputy, Jadranka Kosor, as the best person to replace him.