However, he stopped short of conceding the poll to opposition leader Viktor Yushchenko.
"I have made a decision and am formally submitting my resignation," he said in a televised address on Friday.
"I find it impossible to occupy any post in a government headed by these authorities," he said.
"As far as the election results, we are keeping up the fight but I don't have much hope for a just decision from the central election commission and the supreme court," he said.
Yanukovich had earlier blasted the United States for interfering in Ukrainian affairs, and vowed to contest parliamentary elections in 2006.
"The American influence in the Ukrainian elections was systematic and planned. Concerning the Russian role you can say it was spontaneous and without any preparation," he told Izvestia.
European observers said there
were no major poll irregularities
"We are going to form a tough opposition. We will obtain a majority in parliament [in 2006] and this way we will put pressure on Yushchenko."
Yanukovich, who scored 44.13% compared to pro-West opposition leader Viktor Yushchenko's 52.07% according to near-final results, had complained of more fraud in the latest election and had vowed to mount a legal challenge.
However, European observers have said there were no major irregularities.
Russian President Vladimir Putin has said nothing so far about the election result, in contrast to his hasty congratulations to Yanukovich after the cancelled 21 November runoff.
But Russian Defence Minister Sergei Ivanov told the Interfax news agency on Tuesday that he did not believe Yushchenko's victory would have serious implications for Moscow's close military ties with Kiev.
"I think that there will not be any big change in our cooperation with our neighbour Ukraine in the sphere of defence and security," he said, amid concerns in some quarters in Moscow about the future of Russia's Black Sea fleet, based at the Ukrainian port of Sevastopol.