"I am not announcing a retirement," Lautenberg said in a speech in his hometown of Paterson. "I am announcing today I will be continuing on my mission to do the right thing wherever I can."
Lautenberg, at 89 the oldest member of the Senate, made no mention of any Democrat who he might like to succeed him.
His revelation Thursday he would not seek re-election in 2014 cleared the way for Newark Mayor Cory Booker to accelerate his campaign for the U.S. Senate seat. Booker's announcement in December that he intended to run for the seat had angered Lautenberg, who had wanted the Democratic mayor to hold off until he decided his plans.
Lautenberg also did not say why he decided to retire when his term ends in 2015. He joked at least twice about possibly staying on. "Too late to change my mind?" he asked with a smile.
Asked after his speech who he would like to see take his seat in the Senate, he joked: "Well I'd like to have my wife do it, but she's busy."
Asked why he decided to call it quits in 2015, he said: "Nothing. I think the time with family. My children, my daughters, my grandchildren live all over the country and I want to spend more time with them."
On the issues he will focus on, the liberal Democrat cited gun control first. "We are tired of assaults on our children," he said.
Early public opinion polls had showed Booker as a strong favorite over the incumbent to keep the seat in Democratic hands, but Booker's nascent campaign had been largely on hold until Lautenberg made a decision. Other Democrats, including Rep. Frank Pallone, are also mulling runs.
No Republican has publicly expressed interest in the seat, but a spokesman for the national party viewed Gov. Chris Christie's success in New Jersey as "a hopeful sign" for the GOP's chances even though New Jersey voters haven't sent a Republican to the Senate in 40 years.
Booker created a federal fundraising account allowing him to raise money for the campaign. In doing so, the two-term mayor of New Jersey's largest city dashed hopes that he would challenge Christie in a race for governor that would have pitted two rising national stars against one another.
Though Booker's relationship with Lautenberg has been nettlesome, he issued a statement praising the senator.
"Sen. Frank Lautenberg has been a champion for the people of New Jersey for decades and his legacy of service will improve the lives of all Americans for years to come," Booker said.
President Obama also lauded the reliably liberal senator.
"Throughout his time in the Senate, Frank has fought tirelessly for workers, veterans, members of our military and their families, and immigrants, and he continues to make extraordinary contributions to our nation's safety, and the health and welfare of our citizens," Obama said.
Lautenberg first won election to the Senate in 1982, and became known as a staunch advocate of gun control and public infrastructure and a champion of the Amtrak railroad system. He also crusaded against smoking and youth drinking and supported stiffer environmental laws.
Though he has been easily elected five times and is the Senate's last veteran of World War II, Lautenberg was facing growing pressure to step down. He has had beaten back health problems in recent years. Some within the party noted that if Lautenberg were to die in office, Republican Gov. Chris Christie would get to name a temporary successor.
Christie's popularity, measured in record-high approval ratings after Superstorm Sandy battered the state last year, has given Republicans a sense of optimism for other statewide races in New Jersey, where registered Democrats outnumber registered Republicans by 700,000.
"Gov. Christie has shown that being successful in New Jersey is not a matter of partisanship but rather of leadership, a hopeful sign for our chances in 2014," said Brad Dayspring, communications director for the National Republican Senatorial Committee.
Lautenberg and Christie clashed frequently, most publicly when the governor scrapped plans for a new rail tunnel under the Hudson River between New Jersey and New York after the senator secured $3 billion in federal grants for the project. More recently, however, the two worked together with other members of the state's Washington delegation to help secure $60.2 billion in aid for the region after Sandy.
"Frank Lautenberg and I have had our differences through the years, but I've always respected him for his tenacity, devotion to the people of New Jersey and his love for and commitment to public service," Christie said in a statement.
Lautenberg was diagnosed with cancer - and successfully treated for it - in 2010. A case of the flu this winter caused him to miss the Senate's Jan. 1 vote on avoiding the so-called fiscal cliff.
Lautenberg got into politics after building a fortune as a founder of Automatic Data Processing, a payroll processor. In that race, he defeated patrician Republican Rep. Millicent Fenwick while spending $3 million of his own money.
This isn't the first time Lautenberg has retired. He decided not to seek re-election in 2000, a move that opened the seat for Jon Corzine, who later served a term as governor of New Jersey. But Lautenberg was drafted back into politics two years later when scandal-plagued Sen. Robert Torricelli, a Democrat and Lautenberg's longtime rival, abruptly left the race in 2002.
In 2008, Rep. Rob Andrews challenged Lautenberg in a Democratic primary, but Andrews fell well short of unseating Lautenberg as most of the state's Democratic Party establishment continued to back him.
Delli Santi reported from Trenton, N.J. Associated Press writers Andrew Taylor in Washington and Geoff Mulvihill in Mount Laurel contributed to this report.