Horgan, who became the MLA for Juan de Fuca in 2005, told reporters during a morning press conference at the B.C. legislature that he will not seek the NDP leadership.
"I've been giving it a lot of consideration obviously for the past five months. I've been looking at my own options, as well as options for the party," said Horgan.
"I felt that on balance the best course of action in this instance was to step away, rather than step in the way."
In a tweet shortly before the official announcement, Horgan said that the party "should take time to allow the next generation to shape" the future, and reiterated at the press conference that it's time to let "new blood" take over.
The move to bow out was unexpected, since Horgan came third in the 2011 leadership race, finishing behind Dix and Mike Farnworth, MLA for Port Coquitlam.
Many predicted the upcoming race would be a shootout between Horgan and Farnworth, but Horgan said that notion was preventing other potential leaders from coming forward.
"I was hearing an inevitability - 'Well it's you or Mike, you or Mike' - and that was discouraging participation from other quarters," Horgan said.
Farnworth said he respects Horgan's decision, but is still seriously considering a leadership run of his own.Suggest a correction