Mubarak said he would serve out the rest of his term working to ensure a "peaceful transfer of power" and carry out amendments to rules on presidential elections.
But the half-way concession — an end to his rule months down the road — was immediately derided by protesters massed in Cairo's main downtown square.
Watching his speech on a giant TV set up in Tahrir square, protesters booed and waved their shoes over the heads in a sign of contempt. "Go, go, go! We are not leaving until he leaves," they chanted, and one man screamed, "He doesn't want to say it, he doesn't want to say it."
The 82-year-old Mubarak, who has ruled the country for nearly three decades, insisted that his decision not to run had nothing to do with the unprecedented protests that have shaken Egypt the past week. "I tell you in all sincerity, regardless of the current circumstances, I never intended to be a candidate for another term."
"I will work for the final remaining months of the current term to accomplish the necessary steps for the peaceful transfer of power," he said.
Mubarak, a former air force commander, resolutely vowed not to flee the country. "This dear nation .. is where I lived, I fought for it and defended its soil, sovereignty and interests. On its soil I will die. History will judge me like it did others."
His speech came after a visiting envoy of President Barack Obama told Mubarak that his ally the United States sees his presidency at an end. Frank Wisner, a respected former U.S. ambassador to Egypt who is a friend of the Egyptian president, made clear to Mubarak that the U.S "view that his tenure as president is coming to close," according to an administration official, who spoke on condition of anonymity because of the delicacy of the ongoing diplomacy.