The move is a fresh embarrassment for Park as she tries to reshuffle her government in response to intense criticism over its handling of last month's Sewol ferry disaster.
The president had hand-picked Ahn Dai-Hee barely a week ago to replace Chung Hong-Won, who was forced to resign as prime minister in the wake of the Sewol tragedy.
But Ahn's candidacy soon came under scrutiny amid suggestions that he had exploited his position as a former Supreme Court judge to earn USD 1.6 million in just five months after opening a legal office last July.
"It will be a burden to the government if I remain a nominee," he told reporters.
"I am sorry for causing concern to the president," he said, adding that he would return to the life "of an ordinary citizen".
His decision is a further setback for Park and her ruling Saenuri Party, which fears a voter backlash over the ferry disaster at nationwide local elections on June 4.