(CNN) -- Sen. Evan Bayh, D-Indiana, said Monday afternoon that he won't seek a third term in the Senate -- a major blow to Democrats worried about losses in the midterm elections.
"Congress is not operating as it should," Bayh said at a news conference in Indianapolis, adding there's too much partisanship and "the people's business is not getting done."
Bayh said he loves public service but does "not love Congress" and is "not motivated by strident partisanship or ideology."
He cited the Senate's recent failure to pass a jobs bill and legislation that would have created a deficit reduction commission as evidence of what he characterized as a broken political system.
President Obama released a statement praising Bayh for devoting "his career and his life to serving his fellow Hoosiers."
Bayh, a former two-term governor, was first elected to the Senate in 1998, taking 62 percent of the vote. He won re-election with 64 percent six years later.
In his two terms in the Senate, Bayh cut a centrist path and worked across party lines, which at times frustrated liberal Democrats.
"He hates the Senate, hates the left bloggers," a friend and longtime adviser to Bayh said. "They are getting their wish, pure Democrats in the minority."
While Bayh had been mulling retiring for a "good part of last year," he made his final decision not to seek re-election Friday, said another source, who spoke on the condition of anonymity.
Bayh was scheduled to appear Sunday on CNN's "State of the Union With Candy Crowley," but his office canceled the appearance late Friday afternoon.
Bayh is the third Democratic senator to announce he is retiring when the curtain drops on the 111th Congress. Sens. Christopher Dodd of Connecticut and Byron Dorgan of North Dakota previously said they would not seek re-election.
Democrats will have to defend five open seats in November, as Roland Burris of Illinois and Ted Kaufman of Delaware have said they will not run for their own six-year terms. Burris was appointed to Obama's former Senate seat, while Kaufman was appointed to Vice President Joe Biden's old seat.
Meanwhile, Republicans will be forced to defend six seats in the midterm elections. Sens. Judd Gregg of New Hampshire, Kit Bond of Missouri, Jim Bunning of Kentucky, George Voinovich of Ohio and Sam Brownback of Kansas are all retiring at the end of the year.
Sen. George LeMieux of Florida -- who replaced Sen. Mel Martinez after he resigned before the end of his term -- also will vacate his seat.
Former Republican Sen. Dan Coats recently announced a bid to challenge Bayh this year. Coats served from 1989 to 1999 but chose not to run for re-election. Bayh won that contest.
Former Rep. John Hostettler and state Sen. Marlin Stutzman also are bidding for the GOP Senate nomination in Indiana.
Bayh probably would have faced a difficult re-election due to the anti-incumbent political climate, but an Indianapolis Star/WTHR poll conducted in November indicated that 61 percent of Indiana voters approved of the job the senator he was doing, with 24 percent disapproving.
Bayh also had nearly $13 million in his campaign war chest.
He seemed to face the same frustration many former governors experience when they are elected to the Senate. Instead of being able to make singular decisions, they find themselves members of a slow-moving legislative body where political lines are dug deep.
"I'm an executive at heart," Bayh said. "I value my independence. I'm not motivated by strident partisanship or ideology. These traits may be useful in many walks of life, but they are not highly valued in Congress."
A source noted that Bayh is unclear about what his next step might be but said he would entertain the idea of becoming a university president, running a private business or heading up a charitable endeavor.
Another source added that Bayh could consider another bid for Indiana governor.
A White House source confirmed Bayh discussed his retirement with Obama well before announcing the decision.
However, a Democratic Party source said Bayh's announcement took national Democrats by surprise. The source added that Democratic Reps. Baron Hill and Brad Ellsworth and Evansville, Indiana, Mayor Jonathan Weinzapfel all may consider making bids for the Democratic Senate nomination.
"I appreciate the support of those Hoosiers who have already encouraged me to run for Sen. Bayh's seat," Ellsworth said in a statement.
"The next step will be taking a few days to talk to my wife and to folks in Indiana about where I can best serve our state."
The deadline for a candidate to submit the required number of signatures to have his or her name placed on the Indiana primary ballot is noon Tuesday.
But if no candidate meets that goal -- and no Democrat is expected to do so -- then the Indiana Democratic Party will be able to choose its nominee.
Bayh, a centrist Democrat, reportedly was considered a possible running mate for Obama in 2008. Bayh's father, Birch, served three terms in Senate.
CNN's Gloria Borger, Candy Crowley, John King, Mark Preston, Alan Silverleib, Paul Steinhauser, Deirdre Walsh and Jessica Yellin contributed to this report.