Sheehan, who camped outside President Bush's Texas ranch to protest the Iraq war that claimed her son's life, said she won't challenge the state's senior senator even though she thinks Feinstein hasn't done enough to oppose the war.
"I think I'm more effective on the outside than on the inside," Sheehan said during a news conference across from San Francisco City Hall.
Sheehan, 48, was arrested last week before Bush's State of the Union address and ejected from the House of Representatives gallery on a charge of unlawful conduct for wearing a T-shirt with an anti-war message. Capitol Police later dropped the charge, but Sheehan said Thursday that she plans to sue over the incident.
During a trip to Venezuela last month, Sheehan said supporters had encouraged her to take on Feinstein in the June primary, but that she would have to consult with her family before entering the race.
California's other senator, Barbara Boxer, applauded Sheehan's decision. Though a fellow Democrat, Boxer's politics tend to be more liberal than Feinstein's.
"I very much respect Cindy Sheehan's decision to continue her work as an advocate for our service men and women and our veterans," Boxer said in a statement. "There can be no higher cause than a mother who has lost a son working night and day to ensure that others do not have to suffer the same way."
Sheehan, of Berkeley, said she plans to pitch her tent outside the president's ranch in April.
Her son, Casey Sheehan, 24, was killed in Iraq in 2004.