The 66-year-old senator, who dealt with prostate cancer in 2004 and survived a brain hemorrhage in 2006, did not provide a specific reason for deciding against another campaign, but offered a biblical reference.
"The Bible says that there is a time for every season under heaven. It is now our season to spend more time with our six grandchildren and in the state we love," he said in a release posted on his official website.
He said he was "honored and humbled" to have been allowed to represent the people of South Dakota in the state Legislature, the U.S. House and the Senate.
"You have supported me in multiple elections, and, more importantly, your patience and prayers enabled me to recover from a life -threatening brain injury," he said.
"I will be 68 years old at the end of this term and it is time for me to say good-bye. I will not be running for re-election to the United State Senate in 2014 or any other office.
"I look forward to serving the remaining two years as the country is facing difficult times on many fronts and I will work every day to find a bipartisan solution to these challenges."
President Obama lauded Johnson's dedication "to improving the lives of South Dakota's working families."
"From his early days in the state Legislature to his distinguished career in the Senate, Tim has worked tirelessly to protect our environment, empower rural and Native American communities, and build a financial system that is better able to serve the American people," Obama said in a statement released by the White House. "Always a fighter, Tim's return to the Senate floor after a life-threatening brain injury was a powerful moment and his recovery continues to inspire us all.
"I look forward to working with Senator Johnson as he finishes his third term, and Michelle and I join the people of South Dakota in wishing Tim, [his wife] Barbara and their entire family all the best."