Duguid said he will stay on as economic development minister and plans to seek re-election in his riding in the next provincial election.
Duguid said he made the announcement to "get out of the way" in case other potential candidates were awaiting his decision to run.
"I'm looking forward to seeing a heck of a good leadership race in this province," he said.
Duguid's announcement comes one day after former cabinet minister George Smitherman announced he would also not seek leadership of the party, saying the job "at this time isn’t compatible with my personal objectives."
Finance Minister Dwight Duncan and Ottawa Centre MPP and party president Yasir Naqvi have also announced they will not run, as has Energy Minister Chris Bentley .
The Ontario Liberals have scheduled a leadership convention for the weekend of Jan. 25 in Toronto to select a replacement to Premier Dalton McGuinty, who announced he would step down earlier this month.
McGuinty believes his successor will recognize the need to recall the legislature in a timely manner once he or she takes the reins of the Ontario Liberal Party.
"I would surmise that everybody would sense the desire to return the legislature at the earliest possible opportunity," McGuinty said when speaking with reporters Wednesday.
"That's one of the reasons that we’re having the leadership [contest] take place at a relatively quick pace."
No contenders yet
No candidates have officially announced their intention to run but Liberal MPPs Glen Murray and Kathleen Wynne are considering leadership runs. Former Liberal MPP Sandra Pupatello said last week she is leaning toward entering the race.
When Murray was asked Wednesday if he had a "personal deadline" for making up his mind on a leadership bid, the minister of training, colleges and universities said he would likely come to a decision soon.
"I think you’ll probably know in the very, very near future," Murray told reporters at Queen’s Park.
Wynne told reporters she is still evaluating the options before her.
"I am considering [a leadership run] seriously, there are lots of conversations happening. When I have made my decision, you will all be among the first to know," she said.
New Democrat MPP Peter Tabuns, who represents the Toronto-Danforth riding, said that it will be "a tough ride" for any candidate who is elected as the next leader of the Ontario Liberal Party.
For that reason, Tabuns said he wasn’t surprised to hear that Duguid would not be pursuing the leadership.
"I think for all of us, it will be a surprise when someone actually declares they are going to run," he said Wednesday.
Progressive Conservative MPP Jim Wilson said that "nobody wants the job" that is up for grabs.
He called on any prospective Liberal leadership candidates to announce the date they would recall the legislature. McGuinty has said that date will be determined by his successor.
"None of these potential candidates have given a date as to when they would recall the legislature," Wilson said.
"They’re all too busy planning their own Liberal party fortunes to bother worrying about the fortunes of the people of Ontario."