The announcement came as a surprise to friends and Pentagon officials, The New York Times reported Tuesday.
Flournoy, 50, is the undersecretary of defense for policy and was a close adviser to previous defense secretary, Robert M. Gates, and current Defense Secretary Leon Panetta. She is well-liked and respected in the Pentagon and has been seen a possible future candidate for defense secretary, the newspaper said.
Flournoy is married to W. Scott Gould, a top naval officer at the Department of Veterans Affairs. The couple has three children ages 14, 12 and 9.
The newspaper said Flournoy often worked more than 12 hours a day, plus many weekends, which is a typical schedule for a top Defense Department official.