Citing her opposition to health care reform, federal spending and the general direction she says the country is headed, Hutchison, 66, said, "It has caused me to look at the resignation in a different way. ... For the long term, it's better for my children that I stay."
She ended the 10-minute news conference without taking questions. She has two small children, Bailey, a girl, and Houston, a boy.
The decision comes after 20 Texas Republican House members signed a letter last month urging her to stay in the Senate.
Hutchison said last year that she would step down by the end of 2009 to concentrate on her run for governor.
Then, in late fall, she said she felt she needed to remain in the Senate to battle President Barack Obama's health care initiative. She said she would stay until after the March 2 primary. And on the campaign trail in Texas in late February, Hutchison continued to say she would resign after the health care debate and that she would be gone by November 2010.
Hutchison lost the Republican primary race for governor earlier this month to Gov. Rick Perry, who now faces Democrat Bill White in the November general election.
Hutchison was elected to the Senate in 1993 after serving as state treasurer and as a Texas legislator.
In the letter to Hutchison last week, GOP members of Congress praised Hutchison's years of service and said her experience was needed during this period of "sweeping change."
"We understand your desire to go home to Texas and spend more time with your family. But we hope you realize how necessary your continued service in the U.S. Senate is, for Texas and for our country," the letter stated.
The letter noted that Hutchison is the only woman elected to represent Texas in the U.S. Senate.
Several Texas politicians from both parties have been waiting to run for Hutchison's seat when she leaves office. A Republican candidate would be favored to win that seat if she left, but Democrats saw it as a possibility to win back a Senate seat they haven't had for 17 years.
In the governor's race, Hutchison initially was seen as a real threat to Perry because of her long tenure in office and her popularity in Texas.
Perry's campaign attacked her from the start as "Kay Bailout" and a Washington insider -- a strategy she acknowledged late in the campaign had damaged her chances of winning the governorship.
"I didn't think that anyone could turn my success in producing results for Texas into a negative, but I think that he has attempted to do that and that is what I've been having to fight against," she said shortly before the primary. She continually accused Perry of being arrogant and staying in office too long. He took over as governor in December 2000 when George W. Bush resigned to become president.