"Serious health issues have recently arisen in our family, and under the circumstances, I have decided to discontinue my campaign. My children and their futures were the motivation for our campaign and their health and well-being will always be my overriding priority," Cheney said in a statement.
"Though this campaign stops today, my commitment to keep fighting with you and your families for the fundamental values that have made this nation and Wyoming great will never stop," she said.
The statement did not elaborate on the nature of the health issues, ABC News reported.
The 47-year-old Cheney's decision to abandon her Senate bid came nearly as abruptly as her decision to enter the contest in July, when she caught party leaders in Wyoming and Washington off-guard by setting up a primary fight against Sen. Mike Enzi, a three-term Republican, ABC News said. While trying to rally support of her father's old political network in Wyoming -- Dick Cheney represented Wyoming's at-large House district from 1979 to 1989 -- Liz Cheney struggled to introduce herself to Wyoming voters as well as win over many Republican leaders.
Liz Cheney also had to fight the perception she was a carpetbagger, having moved from Virginia to Wyoming more than a year ago. She aired campaign commercials highlighting her family's roots to the state, but still failed to pick up ground against Enzi.
Cheney also had a public spat with her openly lesbian sister, Mary Cheney, over same-sex marriage in November.
Mary Cheney and her wife Heather Poe criticized the candidate on Facebook, saying she had applauded their union in the past.
This prompted their parents, Dick and Lynne Cheney, to say Liz Cheney "always believed in the traditional definition of marriage."
The Cheney parents also said they were "pained" to see the sisters battle over a private matter in full view of the news media.
Liz Cheney began telling associates during the weekend of her decision to drop her campaign, which raised more than $1 million, said CNN, which first reported the news of Cheney's planned withdrawal.
Her departure would clear the way for Enzi, 69, to win a fourth term, CNN said. Wyoming has not elected a Democrat to the Senate since 1970.
Enzi, the top Republican on the Senate Health, Education, Labor and Pensions Committee, is consistently ranked as one of the most conservative senators.
He expressed annoyance at Liz Cheney's decision to challenge him and has consistently led by wide margins in voter opinion polls.