President Obama issued a statement saying he had accepted Rice's decision and that she would stay on at the United Nations.
The possible nomination of Rice to replace Clinton, who said she would not remain in office for Obama's second term, raised hackles among Republicans in Congress who questioned her qualifications following the attack on the U.S. Consulate in Benghazi, Libya.
Republicans accused Rice of misleading the public in statements shortly after the Benghazi attack indicating it was the result of a spontaneous demonstration.
"While I deeply regret the unfair and misleading attacks on Susan Rice in recent weeks, her decision demonstrates the strength of her character, and an admirable commitment to rise above the politics of the moment to put our national interests first," Obama said. "The American people can be proud to have a public servant of her caliber and character representing our country."