Norwood had asked for a recount after results showed her opponent, Democrat Keisha Lance Bottoms, winning by a narrow margin in the December 5 runoff.
But in a change of mind, the independent candidate conceded late Wednesday night, saying while she believes there were vote irregularities, she will not contest the results.
"For the future of this city, I believe it is the right thing to do to move on and hold a new administration accountable to serve this great city well," she said in a video posted online.
"I thank everyone who came forward to report polling situations and ballot issues that were concerning."
Current Mayor Kasim Reed, who cannot seek reelection due to term limits and supported Bottoms, applauded the decision to concede.
"I congratulate Mrs. Norwood on a hard fought campaign and am pleased that this election has come to a close," Reed tweeted.
"We can now focus on moving our city forward and I will continue to work with Mayor-Elect Keisha Bottoms."
The Fulton County election board ordered the recount following Norwood's request for one. Georgia law allows a second-place runoff candidate to request a recount if the difference between the two is under 1% of the vote total.
The race to lead one of the largest cities in the South echoed Atlanta's 2009 mayoral contest
, when Norwood narrowly lost to Reed and requested a recount. A recount certified the slim loss.
In Georgia, if no candidate secures more than 50% of the vote in the general election, a final race between the top two candidates decides the winner.
Bottoms and Norwood got about
26% and 21%, respectively, of the vote in the November 7 general election, emerging as the top two candidates from a field of 11.
Atlanta is a Democratic stronghold in a state that is largely Republican, and the city's government remains the only major Democratic power center in a state political system dominated by Republican officeholders.
Bottoms cast Norwood as a Republican masquerading as an independent.