"Today, and after many attempts ... once again we reached a dead end," he told a news conference at his residence in Beirut. "That's why I am confirming my decision to excuse myself."
Karami's decision to step down six weeks after his reappointment heightens a political crisis that has left the country without a government since Feb. 28.
His move could seriously undermine the chances of holding parliamentary elections before the expiry of the current legislature's term May 31. A Cabinet is needed to call an election.
Formation of a new government was held up first by a deadlock between the pro-Syrian leadership and the opposition. It has been delayed in the last few days by divisions within the pro-Syrian camp over Cabinet seats.
Karami said he made his decision because of "conflicting demands" among the politicians. He refused to elaborate but added that a five-hour meeting on Monday with President Emile Lahoud (search) and Parliament Speaker Nabih Berri failed to resolve last-minute hurdles.
He said he submitted his written decision to step down to the president after that meeting but did not immediately announce it in the hope that contacts would resolve the differences.