George Tsunis drew virulent criticism for his perceived incompetence after his bungling performance in his Senate confirmation hearing in January, during which he called Norway's prime minister a "president."
Tsunis, the wealthy owner of a hotel chain who raised funds for the Obama re-election campaign, also described the Progress Party as "fringe elements" that "spew their hatred" — though it is in Norway's coalition government.
"It is over," Tsunis said in a telephone interview with Newsday.
"I have elected not to renew my nomination for the next Senate session as I did last year, and will let the nomination expire," Tsunis said in an email quoted by The Los Angeles Times.
Tsunis contributed or solicited a total of $1.3 million for Obama's re-election campaign in 2012, after giving $50,000 to Obama's rival John
McCain in the 2008 presidential race, the LA Times said.
It is common practice in the US for prominent fundraisers to be rewarded with prestigious ambassadorial posts.
But that fact has been criticized by career diplomats, and Tsunis' nomination also faced opposition from many senators and Norwegian Americans.