"Already after the 2010 election I felt that it was my last campaign," she said. "I've been through three campaigns, and it is tough, and I felt that I wasn't prepared to load up for a fourth, and I think everyone can understand why."
She said she wanted to pave the way for her successor, so that person could have three years to prepare for the next election.
She said it will be up to the new party leader if she will keep her position as Sweden's Minister for Enterprise and Energy.
Olofsson, 55, has been the Center party's leader since 2001 and Minister for Enterprise and Energy since 2006.
Speculation over Olofsson's departure began circulating after the party's poor results in the September elections. This spring the pressure had intensified, with several members in her own center-right party calling for her to step down.
Prime Minister and conservative Moderate leader Fredrik Reinfeldt says that he respects her decision, and says that she has renewed her party and moved it to the centre-right of Swedish politics.
Jan Björklund, Education minister and leader of the Liberal party, said that Olofsson's commitment to the Center party renewed its more liberal direction. "In the government, she has shown courage and responsibility," he said.
The Christian Democratic leader and Social Minister Göran Hägglund called her an "energetic and dedicated person who has played a big roll for the creation of the governing Alliance and its successes in 2006 and 2010."
News agency TT reports that the most likely candidates to take over after Olofsson are IT minister Anna-Karin Hatt and the party's economic and political spokesperson Annie Johansson.
"Maud has done unique work as the Center party's leader," said Anna-Karin Hatt, to TT. "She put new energy into the party when she took over and she has during her time as party leader clearly led the party in a more ideological direction so that today the Center party is recognized as a clear bourgeois party."