El-Saadawi, 73, announced her intention to stand in December to try to force the government to accept multiple candidates; but the constitutional amendment,recently passed to allow multi-candidate elections, has been dubbed too restrictive by the opposition.
"The measures accompanying this amendment make it impossible for any viable candidate to present himself or herself to the elections," el-Saadawi said in a statement sent to the Associated Press on Saturday.
She also noted that a judicial report, released early July alleging the government had forged turnout figures and forced state employees to fabricate results in a May referendum to allow Egypt's upcoming presidential elections, as another reason for her withdrawal.
President Hosni Mubarak, in power since 1981, has not yet announced his candidacy, but is widely expected to do so.
Two other controversial figures have also said they plan to contest the September vote: Egyptian-American sociologist and regime critic, Saad Eddin Ibrahim, 66, and former opposition parliament member Mohammed Farid Hassanein, 65.
Opposition al-Ghad party leader Ayman Nour, 40, will also run, but has a suspended court case of forgery casting a shadow over his candidacy.
In her statement, el-Saadawi, also a renowned novelist and psychiatrist, complained about recently passed laws she said were restrictive of political freedom and of authorities banning her from giving lectures, holding meetings in her village or appearing on state radio or TV.
"However I will continue to cooperate with the democratic forces intent on freeing Egypt from a regime which continues to suppress its people and spread corruption and favoritism everywhere," she said in her statement.