Bachus, the 65-year-old chairman of the House Financial Services Committee, won re-election to an 11th term in November, receiving 71 percent of the vote against Col. Penny Bailey, his first Democratic challenger since 1998.
The Campaign for Primary Accountability, a conservative political action committee, announced this year it would concentrate on unseating Bachus in a primary contest.
Bachus was one of several lawmakers who faced scrutiny last year over possible violations of the Securities and Exchange Commission laws prohibiting insider trading. He was cleared of wrongdoing by the Office of Congressional Ethics, the Alabama news website AL.com reported.
Although Bachus did not offer a reason for his retirement, in a statement Monday he called his representation of his district "the greatest privilege imaginable."