A one-time adviser to Mr. Daley and Chicago native, Mr. Emanuel, 50, was a congressman from Illinois until he resigned to take his place in the White House. He has long held ambition to run the third largest city in the United States.
Associates have said previously that he expected out soon after the elections on November 2, in the midst of several tactical disagreements with other presidential advisers.
He says he only reluctantly took a job in the first place which involved uprooting their three children in Chicago.
Emanuel also reportedly fears the effect of wearing one of the toughest jobs in Washington. Most chiefs of staff serve only two or three years.
In a television interview in April, said: "I hope Mayor Daley for re-election. I go to work and support when seeking re-election. But if Mayor Daley did not, one day I would like to run for mayor of the city of Chicago. This has always been an aspiration of mine, even when I was in the House of Representatives. "
Mr. Daley has presided over Chicago for 21 years, following in the footsteps of his father, who died of a heart attack in his 21 years in office.
He said the ad "a personal decision" and said that he and his family now starts from a "new phase of our lives." His wife, Maggie, recently has been battling cancer.
"Ultimately this is a personal decision, nothing more or less ... In short, it is time - time for me, it's time to Chicago to move forward," he said, adding: "It feels good."
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