"I have decided to stand aside," Bachmann told supporters in West Des Moines, adding she intended to "continue to be a strong voice."
While saying she "will not be continuing in this race for the presidency," Bachmann said her faith in the country was "unshakable."
Bachmann, who represents Minnesota in the U.S. House, finished a dismal sixth in Tuesday's Iowa caucuses, collecting about 5 percent of the vote, just ahead of former Utah Gov. Jon Huntsman, who bypassed Iowa for New Hampshire's primary next week.
To defeat President Obama and his "policies based on socialism" means the party must "rally around" the eventual standard-bearer, Bachmann said.
Bachmann made repeal of reforms to the nation's healthcare and financial systems the core of her campaign.
"I have no regrets," she said. "We never compromised our principles. We can leave this race knowing we ran with the utmost integrity."
Bachmann, who was born in Iowa and invested a great deal of time in the Hawkeye State, initially said she would remain in the race, but her campaign Wednesday canceled scheduled events in South Carolina.
Bachmann kicked off her campaign in her hometown of Waterloo, claiming the Iowa straw poll in August. After the initial bump, she saw her campaign and funding lose steam.
Bachmann, who still can run for re-election to Congress, vowed to fight to defeat Obama's "agenda of socialism," excessive regulations, an "unfair" tax code and keeping the country safe.