"The decision I am basically making is to be able to continue to serve in the state of Arizona and my country," McCain said at a press conference.
His agenda includes battling wasteful government spending, trying to overhaul the country's immigration policies and making trips to Iraq, Afghanistan and Pakistan.
Another duty that McCain promised to carry out is seeking the Senate confirmation of Arizona Gov. Janet Napolitano as President-elect Barack Obama's homeland security chief - should she be formally nominated as expected.
McCain said Napolitano, a governor versed in border security, is highly qualified for the job. "We all know that we face challenges from Islamic extremists throughout the world, and I believe that she will do an outstanding job," said McCain, who spoke with Napolitano about the prospect of her landing the position.
Though no potential challengers have yet officially stepped up, McCain says he expects a tough race in two years. McCain has never lost a statewide election, won his last two re-election races with more than two-thirds of the vote, and easily carried his home state in the presidential election with 54 percent of the vote.
Before she became Obama's top homeland security pick, Napolitano was mentioned as a possible Senate challenger to McCain. Her term as governor runs to 2010.
McCain said he remains committed to beefing up border security, improving guest-worker programs and creating a path to citizenship for illegal immigrants. Still, he noted that the country is facing more pressing problems right now. "The state of the economy will be the No. 1 agenda item," McCain said.