"It was a very difficult decision to make, obviously," Matt Bennett, communications director for the Clark campaign, told reporters.
"He did it after the final results were in from Tennessee, and the decision is final."
Clark will formally end his campaign in his home state of Arkansas on Wednesday after his third place finishes in Tennessee and Virginia behind frontrunner senators John Kerry and John Edwards, aides said.
The 59-year-old Clark, in a speech on Tuesday night after the primary results were announced, gave no indication of his intention to pull out of the race.
"We may have the lost the battle today, but, I'll tell you now, we are not going to lose the war for America's future," he said.
"Our goal remains the same: to change the direction of our country and bring a higher standard of leadership to the White House."
Clark won only one of the 14 Democratic primaries or caucuses contested so far - in Oklahoma, the western neighbour of his native Arkansas.
Clark and his wife Gert on the
His failure to make an impact in the southern states of Tennessee and Virginia was apparently the final blow to his quest for the nomination.
Analysts said the retired four-star general made a blunder by electing not to take part in the first presidential contest - in Iowa on 19 January - and he had been unsuccessfully trying to catch up to the field since then.
When he entered the race, Clark's sterling military backround was seen as the attraction for Democrats who have been largely eclipsed on national security issues by Bush and the Republican Party.
But another Vietnam War hero, Senator Kerry, a far more experienced politician, has emerged as the clear favourite to lead the Democratic Party against Bush in November.
Clark was hoping to become the first former general to reach the White House since Dwight Eisenhower in 1952.
Clark graduated first in his class at the elite West Point military academy in 1966. He then went as a Rhodes scholar to Oxford University in England.
On returning to the United States, Clark volunteered for combat duty in Vietnam, where he commanded infantry soldiers in 1969-70.
He was wounded four times and was awarded an array of medals for valour.
The young officer worked his way up the army bureaucracy, and by the time fellow Arkansan Bill Clinton was elected president, Clark was a fast-track general.
Clark was supreme commander of the North Atlantic Treaty Organisation (NATO) when it drove Serbian leader Slobodan Milosevic out of Kosovo in 1999.