"In my case, the critical mass was not there," he said in announcing his departure Thursday morning.
Bertschi told reporters at a news conference on Parliament Hill that he remains "undaunted" in his quest to rebuild the Liberal Party of Canada, but that ending his campaign now is in the best interests of the party.
He said he plans to run again for the party's nomination in the Ottawa-Orléans riding currently held by Conservative Royal Galipeau. Bertschi lost to Galipeau by about 4,000 votes in the last federal election.
He also noted that he hasn't yet raised enough money to pay back the $75,000 loan that financed his failed campaign.
Bertschi declined to endorse another candidate in the race, but he did say that he does not support B.C. MP Joyce Murray's idea of some kind of co-operation with the NDP to defeat the Harper government.
He and Murray are "philosophically different," he said.
His departure leaves six candidates in the running for the leadership of the third party in the House of Commons, following last week's exit by Marc Garneau.
In addition to Murray and the race's apparent front-runner Justin Trudeau, former MPs Martin Cauchon and Martha Hall Findlay, Toronto lawyer Deborah Coyne and retired air force lieutenant-colonel Karen McCrimmon remain in the race.
The party's next leadership debate is set for Saturday in Montreal.