The Portugal great and former FIFA world player of the year said in a statement sent to The Associated Press that he refuses to go along with an election process that is designed "for the delivery of absolute power to one man" — indicating Blatter, the current FIFA president.
Figo's announcement came hours after another candidate, Dutch soccer federation president Michael van Praag, also withdrew from the May 29 poll of 209 FIFA member federations.
That left only Prince Ali bin al-Hussein of Jordan in the race as the three UEFA-supported opponents to 17-year incumbent Blatter finally united in a joint strategy.
Prince Ali joined Van Praag at a news conference in Amsterdam late Thursday to announce new promises in a campaign that has barely a week to attack a global bedrock of support for Blatter.
An immediate expansion of the 2018 World Cup to 36 teams would create one extra place for each of Africa, Asia and the region covering North and Central America and the Caribbean (CONCACAF), plus upgrading playoff entries for South America and Oceania to become guaranteed qualifying slots.
Prince Ali also pledged to give $1 million per year to FIFA members, doubling what each got in a four-year commercial cycle tied to the 2014 World Cup.
A maximum eight years in office for FIFA presidents and committing potential World Cup hosts to respect labour and human rights were also promised.
"These are the brilliant ideas President Van Praag has shared with me, and they are pledges that I believe greatly strengthen the commitments that I had already made," the prince said.
Blatter has led FIFA since 1998 and has not pledged to leave office in 2019, when he would be aged 83, if he wins a fifth term next week as expected.
Figo said during campaigning he encountered hypocrisy among federation presidents around the world, and that people who wanted to speak out had been silenced. He gave no names.
"I have seen with my own eyes federation presidents who, after one day comparing FIFA leaders to the devil, then go on stage and compare those same people with Jesus Christ," Figo said.
He said FIFA was "living under a dictatorship" with Blatter.
Both Figo and Van Praag had argued that FIFA had lost credibility amid corruption scandals and accusations of nepotism levelled at Blatter.
Blatter has pledges of support from most voters in five of FIFA's six continental confederations. Figo said he found "space for normal and democratic debate" in Europe.
Van Praag switched his support to FIFA vice-president Prince Ali, but Figo made no mention of making a similar move.
"FIFA needs change and I feel that the change is urgent," Figo said, adding that he wanted to clean up "FIFA's reputation as an obscure organization that is so often viewed as a place of corruption."
In Amsterdam, Van Praag said he had the support of "many European countries and many more from all over the world," but he declined to name them. He called on his supporters to transfer their votes to the prince.
"Prince Ali bin al-Hussein convincingly demonstrated that at this moment in time he is the candidate who has the biggest chance to challenge Sepp Blatter," Van Praag said.
Sitting next to Van Praag, the prince was not ready to discuss his chances at next week's vote, but said he had sensed a "real desire for change and progress" during his meeting with federations around the world.
"I cannot predict right now, but I think if the football family follows their desires, if things are done in a correct way with no interference then I fully believe we have a great chance of making that change," Prince Ali said.
Figo argued that there should be a public debate on each candidate's proposals.
"Does anyone think it's normal that an election for one of the most relevant organizations on the planet can go ahead without a public debate?" he asked in a reference to Blatter's failure to present an election manifesto. "Shouldn't it be mandatory to present such a manifesto so that federation presidents know what they're voting for? That would be normal, but this electoral process is anything but an election," he said.
Associated Press writer Mike Corder in Amsterdam and AP Sports Writer Graham Dunbar in Geneva contributed to this story.