Spokesman Marc Goldberg says Hassan would have been happy to have Delaney stay on.
Speculation had swirled around the Statehouse for weeks that Hassan wanted to nominate her own attorney general. Delaney's term expires March 31.
Delaney, who is leaving after 14 years in public service, did not immediately return a phone call seeking comment.
Delaney sent a letter to Gov. Maggie Hassan with his announcement Tuesday.
Delaney said he would be returning to private practice.
When asked if Hassan has a nominee in mind, Goldberg said only that "she's working as quickly as possible to identify highly qualified candidates."
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