He said in a social media message, "after much prayer and discussion with family and friends I've decided to retire at the end of this term."
Hatch, the Senate's longest serving Republican, has wrestled with the decision for months, emboldened by the entreaties of President Donald Trump to seek an eighth term.
Now, it sets up a potential path for Trump critic Romney, the 2012 Republican presidential nominee, to reclaim the spotlight as a conservative counterpoint to the President.
Their relationship has been complicated.
Trump has been a longtime Romney critic despite offering a 2012 presidential endorsement, and Romney has been outspoken in his dissent over Trump's rhetoric and policies, calling on Republicans to block Trump's path to the presidency.
"Here's what I know. Donald Trump is a phony, a fraud. His promises are as worthless as a degree from Trump University," Romney said in a March 2016 speech. "He's playing the American public for suckers: He gets a free ride to the White House and all we get is a lousy hat."
Yet after Trump was elected, Romney was under consideration for the post of secretary of state. The two had a warm and animated conversation at a table at Jean Georges at Trump's New York hotel in November 2016 and met at Trump's golf course in Bedminster, New Jersey. Trump eventually chose Rex Tillerson instead.
White House adviser Kellyanne Conway said Trump and Romney spoke on the phone
following Trump's trip to Utah last month.
But Romney has also continued to criticize the President. After Trump blamed "both sides" for inciting deadly violence in Charlottesville, Virginia, last summer, Romney said Trump's remarks "caused racists to rejoice."
In a statement, Romney praised Hatch's service but did not mention anything about a possible Senate run.
I join the people of Utah in thanking my friend, Senator Orrin Hatch for his more than forty years of service to our great state and nation," Romney said in a Facebook post
. "Ann and I wish Senator Orrin Hatch and his loving wife Elaine all the best in their future endeavors."
Trump urged Hatch to stay in Washington
During an event last month at the Utah Capitol where Trump celebrated the administration's decision to shrink the Bears Ears and Grand Staircase-Escalante national monuments, Trump called Hatch "a true fighter" and said he hoped the Republican would continue to serve "in the Senate for a very long time to come."
The 83-year-old Hatch set off retirement rumors early last year when he said in an interview that he hoped to see Romney one day take his place. But he reversed course and repeatedly insisted to reporters that he "intended" to seek re-election. Last month, Hatch reveled in the spotlight as chairman of the Senate Finance Committee while shepherding a massive tax bill through the Senate -- attention, friends and colleagues said, that made him lean toward running again.
"I've always been a fighter. I was an amateur boxer in my youth, and I brought that fighting spirit with me to Washington," Hatch said in a video statement. "But every good fighter knows when to hang up the gloves."
White House press secretary Sarah Sanders said the President is "very sad to see Senator Hatch leave." Trump has the "greatest and deepest respect" for Hatch, particularly for the role he played in passing tax reform.
"I don't think we've made a determination in terms of campaigning," Sanders said with a laugh when confronted with who may run for his seat.
If Hatch had opted to stay in the Senate, he could have faced a formidable challenge from a crop of ambitious Utah Republicans. Boyd Matheson, the former chief of staff to Sen. Mike Lee, seriously considered a bid last fall -- going so far as to meet with former Trump strategists Steve Bannon and David Bossie.
But as it became clear that Romney would likely run if Hatch bowed out, Matheson withdrew from contention -- an acknowledgment that the 2012 Republican presidential nominee is wildly popular in Utah and would have little trouble securing the seat.
Criticism for Hatch at home
While Hatch is revered for his long service to Utahns and easily won re-election last cycle after spending $10 million, voters are clearly restive. Three-quarters of Utahans said it was time for someone else to serve in the Senate, according to a poll late last year by the Hinckley Institute at the University of Utah.
In December, The Salt Lake Tribune published a scathing editorial calling on Hatch to step down -- as the paper named him as "The Tribune's Utahn of the Year," noting that he has never wielded more clout.
The editorial criticized Hatch for "his utter lack of integrity that rises from his unquenchable thirst for power." The editorial board noted that Hatch promised that 2012 would be his last race: "Clearly it was a lie."
"It would be good for Utah if Hatch, having finally caught the Great White Whale of tax reform, were to call it a career," the editorial board wrote. "If he doesn't, the voters should end it for him."
The newspaper pointed out that Hatch, who has referred to himself as "a tough old bird," has faced questions about his age and his health -- acknowledging that his decision on whether to run again would likely hinge on his own health and the health of his wife.
"He has been a senator from Utah longer than three-fifths of the state's population has been alive," the editorial board wrote.