The former Minnesota governor said he had hoped to get a jolt from the preference poll that is an early indicator of a candidate's potential strength in the primary season.
"I'm ending my campaign for president," Pawlenty told ABC's "This Week," noting that he wished the scenario had been different but voters were looking for something else.
The message Pawlenty was offering "didn't get the kind of traction or lift that we needed and hoped for coming into the and out of the Ames straw poll. We needed to get some lift to continue on and to have a pathway forward. That didn't happen," he said.
"Obviously, we had some success raising money, but we needed to continue that, and Ames was a benchmark for that. And if we didn't do well in Ames, we weren't going to have the fuel to keep the car going down the road," he added.
Pawlenty received 13 percent of the vote in the Saturday poll, which is not generally a marker of the future presidential nominee. Minnesota Rep. Michele Bachmann received 28 percent of the nearly 17,000 votes cast followed by Texas Rep. Ron Paul, who earned 27 percent. Former Pennsylvania Sen. Rick Santorum earned 9 percent and businessman Herman Cain received 8 percent.
But Pawlenty, who had relied on organizational strength and popularity in the lead-off caucuses state, has struggled to gain traction in Iowa, where he and Bachmann, who was born in the state, have conducted a surly back-and-forth.
After his third-place finish, Pawlenty issued a statement saying that he merely needed to show progress, and had achieved that goal.
"We are now moving onto the next phase of our campaign. Over the coming weeks we will be visiting New Hampshire, South Carolina and Florida while continuing to grow our already strong ground game in Iowa," Pawlenty said.
But a senior adviser told Fox News that during a Sunday morning conference call, Pawlenty told supporters, "We cannot envision a path forward to victory and so therefore, we made a decision to end the campaign."
The winner of the Republican presidential nomination will face President Obama in the 2012 election.