His office confirmed the decision in a statement circulated ahead of a news conference in Stamford.
"The reason I have decided not to run for re-election in 2012 is best expressed in the wise words from Ecclesiastes: 'To everything there is a season, and a time to every purpose under Heaven,"' Lieberman said in prepared remarks.
"At the end of this term, I will have served 24 years in the U.S. Senate and 40 years in elective office. For me, it is time for another season and another purpose under Heaven," he said.
While Lieberman's hawkish views on the military and the Iraq war rankled some Democrats, his support for gay rights and abortion rights won him the praise of many liberals.
Lieberman, 68, nearly won the vice presidency on the Democratic ticket with running mate Al Gore in 2000 and mounted an unsuccessful presidential bid in 2004.
He was defeated the last time he ran for the Democratic Senate nomination in Connecticut, in 2006, but won a new term running as an independent in a three-way race.
Top Democrats such as Obama and then-Connecticut Sen. Christopher Dodd who had supported Lieberman in the 2006 primary instead backed Democratic nominee Ned Lamont in the fall general election. Lieberman was disappointed that some old friends weren't loyal to him.
In the years since, he aligned himself with Democrats in the Senate, who permitted him to head a committee in return. Yet in 2008 he supported McCain.
Lieberman's decision to speak at the 2008 GOP presidential nominating convention angered Democrats, and the speech he gave contrasting Obama, then a first-term senator from Illinois, and McCain angered them more.
"In the Senate, during the 3-1/2 years that Sen. Obama has been a member, he has not reached across party lines to ... accomplish anything significant, nor has he been willing to take on powerful interest groups in the Democratic Party to get something done," Lieberman said at the time.
Lieberman's poll ratings in his home state had slipped in recent years, encouraging Democratic challengers and sparking speculation about the senator's retirement. Dodd recently retired from the Senate.
Hours before Lieberman's plans became public, former Connecticut Secretary of the State Susan Bysiewicz said she would run in 2012 for Lieberman's seat.
Reps. Chris Murphy and Joe Courtney are considering a run. Republican Linda McMahon is also seen as a potential challenger, despite losing her Senate bid last year against Democrat Richard Blumenthal.
"Over the past few months, people from across Connecticut whose advice I respect have encouraged me to consider a Senate run," Courtney said in a statement. "I am seriously considering that challenge."
After the 2008 election and at Obama's urging, Senate Democrats decided not to punish Lieberman for supporting the GOP ticket. They voted to let him keep his post as leader of the Senate Homeland Security and Governmental Affairs Committee. Obama was eager to strike a bipartisan tone for his presidency.
Two years ago, some state Democrats wanted to censure Lieberman for his actions. Ultimately, he was sent a stern letter. Since that time, he has had scant interaction with the party.
Lieberman told The Associated Press last month that he was considering whether to seek another term in the Senate.
"It's a difficult decision for me because I really have loved my service here in the Senate, and I feel privileged to be here," he said. "I guess the question is -- and I think you've always got to ask is -- `Now, after 22 years, 24 years after this term is over, do I want to do it again? Or, do I want to try something else?' That's the question you've got to answer."
Five weeks after the attacks on Sept. 11, 2001, Lieberman was one of the first politicians to call for the ouster of Iraqi leader Saddam Hussein and he was a staunch supporter of the military invasion of Iraq.
As chairman of the Senate Governmental Affairs Committee, Lieberman led the efforts to create the Department of Homeland Security.
Lieberman gained national attention in 1998 when he gave a politically explosive speech on the Senate floor criticizing President Bill Clinton, his friend of many years and a fellow centrist Democrat, over the Monica Lewinsky affair.
Associated Press writers Andrew Miga and David Espo in Washington and Susan Haigh in Connecticut contributed to this report.