Sanders thanked his supporters and campaign workers in his announcement.
"I wish I could give you better news, but I think you know the truth," he said. "The path toward victory is impossible.
"This battle for the Democratic nomination cannot be successful."
Sanders called his decision to leave "very painful."
His exit came as Biden held a substantial lead in Democratic delegates and was the party's presumed nominee.
Sanders cited the coronavirus crisis as undeniable proof that employer-based healthcare in the United States is failing Americans.
This was Sanders' second run for president, following an unsuccessfully campaign against Hillary Clinton in 2016.
At age 78, and following a heart attack last year, this was likely his final run for the presidency. He finished second in Iowa's early primary before winning New Hampshire and Nevada. He struggled to maintain momentum in the contests that followed, giving way to large swaths of support for Biden in South Carolina, Texas and Florida.
Sanders' coalition and the source of millions of dollars in small donations were largely made up of young voters supportive of his plan to cancel student debt and offer Medicare to all Americans. Support from female and black voters proved more difficult to obtain, and he lost some of his white working-class voters to Biden.
Speaking directly to the camera in social distancing conditions on Wednesday, Sanders suspended the campaign, offering "deep gratitude" to 2 million financial contributors who he said offered, on average, $18.50 per donation. He noted that "we won the ideological struggle" and "moved radical ideas to mainstream thought," and with young voters supporting him, "the future of this country is ours."
Sanders said the current coronavirus pandemic magnifies "how absurd our current employer-based [healthcare] system is." Sanders cited Nelson Mandela in noting that healthcare, better working conditions, education, a clean environment and social justice are impossible to achieve "if we don't believe we are entitled" to them.
He closed his address by adding that his name will remain on the ballots in states that have not yet held primaries, to bring the largest possible support to the Democratic National Convention in August.