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 no Israeli troops will go to Beirut after call with Netanyahu
Iran halting indirect talks with US over Israel's Lebanon incursion
Trump says Iran really wants to make a deal with the US
Israel's Netanyahu orders attacks in Beirut's southern suburbs
Malaysia bars under-16s from signing up for social media
