In a development that sends the contest into unchartered territory, the US president announced that he will no longer be seeking a second term.
Instead, another Democrat will now need to be chosen to face off against Republican nominee Donald Trump in November in a race that has already been marked by tension, division and an assassination attempt.
In a statement addressed to "my fellow Americans", he said it had been the "greatest honour of my life to serve as your president".
"While it has been my intention to seek reelection, I believe it is in the best interest of my party and the country for me to stand down and to focus solely on fulfilling my duties as president for the remainder of my term."
He continued: "I will speak to the Nation later this week in more detail about my decision.
"For now, let me express my deepest gratitude to all those who have worked so hard to see me reelected.
"I want to thank Vice President Kamala Harris for being an extraordinary partner in all this work. And let me express my heartfelt appreciation to the American people for the faith and trust you have placed in me.
"I believe today what I always have: that there is nothing America can't do - when we do it together. We just have to remember we are the United States of America."
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Mr Biden's wife Jill Biden reposted the statement on X with a loveheart.
The seismic development comes after months of speculation about Mr Biden's age and fitness to serve another four years - amid a series of high-profile gaffes and a disastrous debate performance.
Mr Biden, 81, had previously insisted he was best placed to defeat Mr Trump in the upcoming election but had faced calls from within his own party to step aside.
A source close to the president recently admitted "we're close to the end" after Barack Obama, the former president who picked Mr Biden as his vice-president during his two terms in office, reportedly shared his concerns about his ally's re-election bid.
And he tested positive for COVID while on the campaign trail, with mild symptoms including "general malaise".
Attention will now turn to who will succeed him, with the selection likely to happen at the Democratic National Convention in August.
