Ardern, 42, said she took time to think about her future during the summer holidays.
“I was hoping to find what I needed to continue during that period, but unfortunately I did not find it, and my continuation will not benefit New Zealand,” she told reporters.
Ardern became the youngest female head of government in the world when she was elected Prime Minister of New Zealand in 2017, at the age of 37.
A year later, she became the second elected world leader to give birth while in office.
She led New Zealand through the coronavirus pandemic and ensuing economic recession, the Christchurch mosque shooting, and the White Island volcano eruption.
She said, “Leading your country during times of peace is one thing, and leading your country through crises is another.”
“These events, they were stressful because of their weight, their sheer weight and their constant nature. There was never a moment when I felt like we were just ruling.”
Ardern led Labor to a landslide election victory in 2020, but her local popularity has fallen to new lows in recent months, according to opinion polls.
However, Ardern said she did not resign because she believed Labor would not be able to win the election
“We need a new pool of talent for this challenge,” she added.
Al Deputy Leader Grant Robertson said he would not run in Sunday’s leadership election. If a single candidate cannot gain the support of two-thirds of the party chamber, the vote will go to ordinary Labor members.
Australian Prime Minister Anthony Albanese praised Ardern as a leader of intellect, strength and compassion.
“Jacinda has been a staunch advocate for New Zealand, an inspiration to many and a great friend of mine,” he tweeted.
Ardern listed her government’s achievements in climate change, social housing, and reducing child poverty as ones she was particularly proud of.
But she said she hoped New Zealanders would remember her “as someone who always tried to be nice”.
“I hope to leave New Zealanders with the belief that you can be gentle, yet strong, empathetic and decisive, optimistic and focused. And you can be your kind of leader – someone who knows when it’s time to go.”
