Deal's departure takes effect March 8 and could impact a possible House vote on health care reform. It also effectively shuts down a House ethics probe of his business dealings with the state.
"I firmly believe that now is the season for me to devote my full energies to the campaign for governor," Deal told about 100 supporters at a news conference in Gainesville.
Deal is the third Republican to give up his seat to focus on the governor's race. Karen Handel resigned as secretary of state, and Eric Johnson stepped down from the state Senate.
Deal, 67, represents the mountainous 9th District in north Georgia. He served in the Georgia Legislature as a Democrat and was elected to Congress in 1992. He switched to the Republican Party in 1995 and is one of the longest serving members of the state's congressional delegation.
A former prosecutor and juvenile court judge, Deal is one of seven Republicans running to replace Gov. Sonny Perdue, who by law cannot seek a third term. Five Democrats are also in the race.
Deal was facing a pair of congressional probes after an August report in an Atlanta newspaper raised questions about a lucrative no-bid contract Deal's auto salvage business had with the state.
The report found that Deal personally intervened with state officials to fight proposed changes to the arrangement that could have created competition for the state's business. The contracts earned Deal's company $1.5 million from 2004 to 2008.
Officials said that because Deal will no longer be in the House, the congressional committees will no longer have jurisdiction over him.
Deal's gambit could reverberate in the Capitol Hill showdown on health care. Democratic House leaders are scrambling to line up enough votes to approve a new health care overhaul bill. If Deal's seat is still vacant, Democrats would need one less vote to pass the measure. The House passed the previous Democratic-backed health care bill by just five votes last November.
After Deal steps down, Gov. Sonny Perdue has 10 days to file a writ of election to fill Deal's seat. The election can then be held at least 30 days after that writ is issued.
Perdue could wait until Georgia's July 20 primary, or even the Nov. 2 general election to fill the seat. Or he could have an independent special election. There was no word from Perdue on his plans.
The 9th congressional district is reliably Republican. GOP presidential nominee John McCain won about 75 percent of the vote there in the 2008 presidential contest.
About a half-dozen people have said they will vie to replace Deal.
Deal's resignation marks a turnabout for a campaign that just a few months ago had cast Handel as a quitter when she announced she would resign as secretary of state.
In December, Deal spokesman Harris Blackwood noted that the congressman "has taken an oath to serve the people of Georgia and has a clear record of completing his terms."
Deal's announcement Monday drew a rebuke from a GOP rival for governor, state insurance commissioner John Oxendine. His spokesman, Tim Echols, said the congressman was leaving Georgia "without a voice in Washington during the vital health care debate."
"We are hopeful that this isn't an attempt to circumvent an investigation into the state-funded program that benefited his auto salvage business," Echols said.
But a Deal backer said the congressman was under pressure from prominent Georgia Republicans worried about a possible Oxendine primary win.
Chip Lake, chief of staff to U.S. Rep. Lynn Westmoreland, said there was "growing concern that the insurance commissioner could win the Republican primary on name ID alone and (Democratic gubernatorial candidate) Roy Barnes beats the shakedown artist Oxendine like a drum in November."
Deal's announcement came on the heels of news Saturday of U.S. Rep. John Linder's retirement. The Gwinnett County Republican said he will not seek re-election after serving 18 years in Congress.