Thune, who is serving his second term, was seen as one of several potential challengers to President Barack Obama in 2012.
In a statement on his website, Thune said he appreciates the encouragement he's received from supporters, but that he felt urgency to stay in his current position.
"There is a battle to be waged over what kind of country we are going to leave our children and grandchildren and that battle is happening now in
"So at this time, I feel that I am best positioned to fight for
Thune, 50, captured the national spotlight in 2004 when he defeated Democrat and then-Senate Minority Leader Tom Daschle in a tight race.
He has since ascended to No. 4 in the Republican party ranks as chairman of the Senate Republican Policy Committee.
His opposition to gay marriage and abortion has earned him points with evangelicals, while his pro-business, anti-tax and pro gun-rights stances have garnered support among more libertarian leaning conservatives.
But some conservatives have criticized Thune's vote for the Wall Street bailout in 2008.
Thune is not well known outside South Dakota, but some Republican operatives had hoped he might emerge over time as a presidential contender with solid conservative credentials and a can-do, common-sense Midwestern aura.
The most optimistic of these people suggested Thune could become "a Republican Obama." They noted his rather modest federal government resume, hoping he could fill in the blank spaces with policy proposals and character traits appealing to a wide swath of voters.
However, with six years each in the U.S. House and Senate, Thune has spent considerably more time in Congress than Obama had when he was elected president.
On Tuesday, Thune said he and his family had given a "great deal of thought" to how best to serve
"Along the way, we have been reminded of the importance of being in the arena, of being in the fight," Thune said in the statement. "And make no mistake that during this period of fiscal crisis and economic uncertainty there is a fight for the future direction of
Associated Press writer Charles Babington contributed to this report from