Kohl, who will have served four terms when he leaves, told the people of Wisconsin in a message on his Web site:
"So even though I continue to love this job, I have decided that the time has come to give someone else the opportunity to serve. Therefore, I am announcing today that I will not seek another term as your senator. Rather, I will devote all my energy and time in the next 19 months to continuing to serve the people of our state."
Kohl, owner of the Milwaukee Bucks and president of the Kohl's department store chain until it was sold, said he never considered the Senate seat his. He said it belongs to the people.
The 76-year-old senator said he has enjoyed serving in the Senate.
"I've always believed that it's better to leave a job a little too early than a little too late. And that's how I feel today," Kohl said.
"The interest and energy I have for this job will find a new home at the conclusion of this term," he said.
Kohl, becomes the sixth Democratic senator stepping aside in advance of the 2012 elections.
Democratic strategists told The Washington Post said they would field a top candidate for the open seat. They say the fight between Republican Gov. Scott Walker and unions over collective bargaining in the state has energized the Democratic Party.
Mentioned as possible candidates are Rep. Ron Kind, former Sen. Russ Feingold, former Rep. Tom Barrett, who lost to Walker in November, and Reps. Tammy Baldwin and Steve Kagen.