Davis, a moderate Republican who has represented the northern Virginia suburbs of Washington since 1995, said in a statement that "the time is right to take a sabbatical from public life."
"I have not yet decided what opportunities to pursue when I depart Congress. But it's clear to me that returning to the private sector and reacquainting myself with that view of the world is the best move for me and my family," said Davis, 59. "I am confident we will keep this seat in Republican hands."
Last year, Davis opted against seeking the U.S. Senate seat to be vacated by retiring Sen. John Warner, R-Va. At the time he criticized his party for its decision to choose its nominee by convention rather than primary - a move that favored more conservative elements of the GOP, who were lining up behind former Virginia Gov. Jim Gilmore.
Many people speculated that Davis would be vulnerable in a district that has increasingly voted Democratic in the past eight years. Two high-profile Democrats, former congresswoman Leslie Byrne and Fairfax County Board of Supervisors chairman Gerry Connolly, had already taken steps to run for the seat.
On the Republican side, no clear heir apparent exists for Davis' seat. Prince William County Board of Supervisors Chairman Corey Stewart, who won re-election last year after taking an aggressive stance against illegal immigration, is considered a possible contender. His predecessor in that post - U.S. Maritime Administrator Sean Connaughton, a Davis ally - has also said he might consider a run.
Davis said in his statement that he is not ruling out future runs for public office. He plans to serve the remainder of his term.
Davis was elected in the GOP tidal wave of 1994 but carved out a different path from some of the more conservative members of that class. He focused on issues involving the District of Columbia and
federal workers and was generally regarded as a moderate.