Polls throughout the campaign have shown that Ahn and Moon would split the opposition vote, allowing Park Geun-hye to win, Yonhap News Agency reported. Park, daughter of President Park Chung-hee, is a conservative representing the ruling Saenuri Party.
"I am giving up my presidential candidacy," Ahn said, appearing close to tears at a Seoul news conference. "From now on, Moon Jae-in is the single liberal candidate."
Ahn, a successful software entrepreneur, and Moon, a legislator, former human rights lawyer and chief of staff to President Roh Moo-hyun, representing the Democratic Union Party, had been in talks on merging their campaigns. Ahn's announcement came after they failed to reach agreement Thursday.
At his news conference, Ahn said the continued disagreement is not "righteous for the people anymore."
The election is scheduled Dec. 19. Hahm Sung-deuk, a political science professor at Korea University, predicted liberals will unite behind Moon with Ahn's withdrawal rekindling their enthusiasm.
Shin Yul, a professor at Myongji University, said, however, the move comes too late in the campaign.
"People who support Ahn will become swing voters, and I think that about 40 percent of voters that are conservative-centrist will support Park," Shin predicted.