"I'm withdrawing from any consideration of being the Democratic party's nominee for the presidency," he said.
Instead, the former Republican said he would discuss the possibility of an independent run for president -- which is significantly more difficult and requires significant funding -- during the "next couple of weeks." He said he understands the "histories of independent candidacies."
"We'll just have to see what happens next," he said.
Webb served as Secretary of the Navy under President Reagan, but switched parties in protest to the Iraq War and ran for Senate as a Democrat in Virginia in 2006. He said today that he takes it "as a compliment" that his party affiliation has been hard to pin down.
"Some people say I am a Republican who became a Democrat, but that I often sound like a Republican in a room full of Democrats or a Democrat in a room full of Republicans," he said.
"More people in this country called themselves independents than Republicans and Democrats," he said today at the National Press Club in Washington, D.C., speaking with his wife at his side. "Our country is more important than a label. ... The other party in America is not the enemy."
There has been little evidence of the Webb campaign in the last few months. He has struggled to raise money or build any campaign infrastructure. Many voters in the early voting states say they have not met him, and Webb conceded today he could have been more active on the campaign trail.
"We made visits. We didn't make as many visits as we could have, if I had the financial resources to do it, or if I had made different decisions about traction," he said.
During last week's first Democratic debate, Webb protested not getting enough speaking time and he is currently polling at 1 percent in the latest ABC News/Washington Post poll released today.
Webb holds several positions that are more conservative than other 2016 Democratic presidential contenders. "The hierarchy is not comfortable with many of the policies that I have laid forth, and frankly, I am not comfortable with theirs," he said.
"It's been very difficult in the Democratic primary process with the domination of one of the candidates," he said, alluding to Hillary Clinton's frontrunner status. When asked whether he still identified as a Democrat, "Let me think about that," he said.
"I've worked with both sides," Webb said. "I have a lot of respect for many people who are members of both political parties. I know how broken our system really is. This country needs a new dynamic that respects and honors our history, our traditions, and is not a slave to the power structures that are failing us."
Webb's campaign spokesperson, Craig Crawford, told ABC News the announcement that he would consider an independent bid was "not sudden," and that he has seen this coming for a while.
"The Democratic Party power structure has made it clear for a long time that this is not a level playing field," he said about a potential independent bid. Crawford would not confirm whether Webb would actually mount an independent run for the White House.