But Dean suggested he still would like to win votes and accumulate delegates in the coming primaries to have a voice in the party's direction. Noting that his name would remain on state ballots, he urged backers to participate in the rest of the nomination process.
"Use your network to send progressive delegates to the convention in Boston," he said. "We are not going away."
Dean said he would not make a third-party bid for the White House and urged his followers not to be "tempted" into supporting an independent candidate.
"The bottom line is we must beat George Bush," he said.
Dean has won 202 delegates so far. Those chosen in primaries or caucuses are pledged to vote for him on the first ballot at July's national convention, but "superdelegates" - party leaders and elected officials - are free to change their allegiances at any time.
In bowing out, Dean sought to frame his campaign's accomplishments for posterity. He said his message - confronting President Bush - had emboldened the other Democrats to assail the "special interests" in Washington.
"We have demonstrated to other Democrats that it is a far better thing to stand up to the right-wing agenda of George W. Bush than to cooperate with it," Dean said. "We have led this party back to considering what its heart and soul is."
Aides said Dean had no immediate plans to endorse another candidate, although he had kind words recently for Sen. John Edwards of North Carolina, and the two have talked since Sunday. Edwards and Massachusetts Sen. John Kerry, a particular target of Dean's barbs on the campaign trail, praised Dean yesterday for energizing the Democratic base.
"He has done an extraordinary job of invigorating a whole group of people who were divorced from the political process," Kerry, the front-runner, said in Dayton, Ohio.
Edwards, in a statement, said Dean "energized and revolutionized this race, and excited a whole new generation of young Americans. He deserves our thanks."
Dean had staked his diminishing hopes on Wisconsin's fabled independent streak, thinking a miracle victory there would keep him alive. Instead, he finished a distant third Tuesday, behind the victorious Kerry and a surging Edwards.
It remains unclear what form Dean's new organization would take. Campaign CEO Roy Neel said details would be drawn up over the next several weeks.
"There are a lot of ways to make change," Dean said. "We are leaving one track but taking off on another."
In the audience yesterday, staffers and supporters wept openly and hugged one another, as a two-year enterprise that had taken off and rapidly risen to the top, then crashed to earth just as fast, came to an end.
Near the middle of Dean's speech, a woman shouted: "We believe in you, Howard!"
He paused, looked up and said: "Believe in yourself."
As Dean bowed out, Kerry and Edwards forged ahead on their campaigns, focusing on the 10 state contests of March 2.
Kerry took his campaign to Ohio - another state hard hit by losses in manufacturing jobs - and sought to punch a hole in Edwards' image as a populist who favors limits on free trade.
Edwards, who ran a surprisingly close second in Wisconsin, emphasized the nation's 5.6 percent unemployment rate in his campaign and blamed trade for lost jobs.
The loss of manufacturing jobs has been a key issue for the Democratic candidates. They have consistently faulted trade deals, saying they make it easier for companies to shift production to countries where labor is cheaper and environmental standards more relaxed.
Kerry maintained yesterday that he and Edwards had almost identical Senate records on trade votes and that they propose essentially the same remedies for improving trade deals.
"He voted for the China trade agreement. So did I," Kerry said. "We both of us want to have labor agreements and environment agreements as part of a trade agreement."
Edwards, in a conference call with reporters, insisted it was clear that his and Kerry's records on trade differed.
Edwards and Kerry both voted to grant China favorable trade treatment; both call for including terms that protect labor and the environment in all future trade deals. However, the two split on a 2000 Senate vote on a trade pact for Africa and the Caribbean. Kerry supported it; Edwards opposed it.
In addition, Edwards voted last year against two trade deals, with Singapore and with Chile. Kerry did not vote on either. In a statement in the Congressional Record, Kerry commended both deals but said they failed to include adequate enforcement of worker rights.
The biggest trade issue dividing the two is the North American Free Trade Agreement, or NAFTA, the 1993 pact with Mexico and Canada. Kerry voted for it. Edwards was not in the Senate in 1993; he says that he opposed NAFTA.
"I don't know where he registered his vote," Kerry said, "but it wasn't in the Senate."
Edwards did voice strong reservations about NAFTA during his 1998 Senate campaign, citing job losses in North Carolina.
The AFL-CIO, which opposes trade accords such as NAFTA, is set to endorse Kerry today.
In appealing for workers' votes, Edwards also draws a stylistic distinction with Kerry by emphasizing his background as the son of a South Carolina mill worker who was the first in his family to attend college. Kerry comes from a Boston Brahmin family; his father was a diplomat, and he was schooled overseas, at a New England prep school, and at Yale University.
Kerry, though, fared better in Wisconsin among low-income voters and voters without a college education, according to exit-poll surveys of voters.
Contact staff writer
Thomas Fitzgerald at email@example.com.
Tim Funk and James Puzzanghera of the Inquirer national staff contributed to this article.