Bloomberg made the decision after he won just one Super Tuesday primary, in American Samoa. In Virginia, he finished a distant fourth despite spending $18 million on television and digital ads there.
"Three months ago, I entered the race for president to defeat Donald Trump. Today, I am leaving the race for the same reason: to defeat Donald Trump -- because it is clear to me that staying in would make achieving that goal more difficult," Bloomberg said in a statement.
"After yesterday's results, the delegate math has become virtually impossible -- and a viable path to the nomination no longer exists. But I remain clear-eyed about my overriding objective: victory in November."
Speculation that the wealthy media mogul would leave the race began shortly after polling data began coming in Tuesday night, and it became apparent his unorthodox strategy of skipping the first four contests to focus on Super Tuesday hadn't paid off.
In announcing his departure, Bloomberg said he has stepped in line behind Biden.
"It is clear [the best] candidate is my friend and a great American, Joe Biden," he said.
"I want my supporters to stay engaged, stay active and stay committed to our issues. I will be right there with you. And together, we will get it done."
Bloomberg was a late entry to the Democratic field, announcing his bid in November. He spent hundreds of millions of dollars of his own wealth on his campaign.