"It has been one of the highest honors and privileges of my life to have served the people of Illinois in the United States Senate," Obama said in a statement.
Illinois Gov. Rod Blagojevich, a Democrat, is responsible for naming a successor to Obama, the only African-American in the Senate, The Chicago Tribune reported.
Blagojevich said he expects to make a decision by year's end and is "not interested" in naming himself to the post.
Aides to Obama said he would not return to Washington to vote on Senate matters this fall, in advance of his being sworn in as the nation's 44th president Jan. 20. .
"In a state that represents the crossroads of a nation, I have met so many men and women who've taken different journeys, but hold common hopes for their children's future," Obama said. "It is these Illinois families and their stories that will stay with me as I leave the United States Senate and begin the hard task of fulfilling the simple hopes and common dreams of all Americans as our nation's next president."
Those who expressed interest or are being considered to succeed Obama include U.S. Reps. Jan Schakowsky and Jesse Jackson Jr.; Illinois Veterans' Affairs head Tammy Duckworth; state Attorney General Lisa Madigan; state Treasurer Alexi Giannoulias; and state Senate President Emil Jones Jr.
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