Reid, 75, said he will not run for a sixth Senate term in 2016, when he would have faced a tough re-election battle. The Nevada Democrat would have been a top target for Republicans in the next congressional elections, when Democrats will be battling to retake control of the Senate.
Reid, who shepherded key Obama administration initiatives including the president's health care law, lost his role as majority leader — the Senate's top job — when November's elections swept the Republicans into control. Now the Senate minority leader, Reid suffered a personal setback on New Year's Day, falling while exercising and suffering serious bruises and a lasting injury his right eye.
Reid said the recovery period gave him to think about his political future.
"We have to make sure that the Democrats take control of the Senate again," he said. "And I feel it is inappropriate for me to soak up all those resources on me when I could be devoting those resources to the caucus."
Reid, a gold miner's son who rose from nothing in a tiny desert town, had grown highly unpopular in his home state due to positions he'd taken on national issues. He turned back a challenge in 2010 and was sure to face an aggressive, big-money attack by Republicans if he ran again.
Republicans salivated at the opportunity to pick up Reid's Senate seat in Nevada, where Reid and his machine have dominated the political scene.
"Not only does Reid instantly become irrelevant and a lame duck, his retirement signals that there is no hope for the Democrats to regain control of the Senate," said Ward Baker, executive director of the National Republican Senatorial Committee. "With the exception of Reid, every elected statewide official in Nevada is Republican."
His departure will set in motion a scramble in the Senate's Democratic leadership lineup between his top two deputies, Sen. Chuck Schumer of New York and Sen. Dick Durbin of Illinois. Reid gave Schumer a major boost, saying through his spokesman that Schumer "has earned" his caucus' support to be the next party leader
As majority leader, Reid thrived on behind-the-scenes wrangling. He guided the Senate through a crippling recession and the Republican takeover of the House in the 2010 elections, which sparked years of bitter partisan battles and congressional gridlock.
He was known for impolitic remarks, once complaining that tourists to the Capitol smelled, and calling former President George W. Bush a "loser" and a "liar."
Even from his post in the minority, Reid leveraged Senate rules to exert steely control. He held his 46-member caucus together against attempts by Republicans to pass legislation undoing Obama's executive actions on immigration.
Reid said his role leading the Senate Democrats is "just as important as being the majority leader" and he would remain focused on that for the nearly two years left in his term.