In a letter to Clinton, Cisneros said he would have liked to have remained but "I have concluded that I cannot ask to be considered for service in the next four years."
He is the seventh of the 14 Cabinet members to indicate he won't be staying for Clinton's second term.
Cisneros said in an interview that he is leaving because he needs to seek a higher-paying job outside government. He has one daughter in college and another in law school.
He also has legal bills from the ongoing probe into whether he lied to the FBI about payments to a former mistress. The investigation cast a pall over Cisneros' ability to remain at HUD because of the legal bills it continues to generate.
"Really, I came to do this for four years. I prayed I could stretch the finances that far," Cisneros said. "This is about as far as I can stretch it."
His salary as secretary of housing and urban development is $148,400 a year.
Cisneros is not the only Clinton aide who has had to absorb huge legal fees because of investigations; others in debt to their attorneys include senior Clinton adviser George Stephanopoulos and Maggie Williams, Hillary Rodham Clinton's staff chief.
Cisneros said he informed Clinton of his decision, and the president "understood the decision I have made."
"The president thanks Secretary Cisneros for the outstanding work he's done at HUD and for being a good friend," said White House spokesperson Mike McCurry.
Earlier yesterday, Cisneros told reporters he had had conversations with several mayors mentioned as possible successors, including Norm Rice of Seattle, Dennis Archer of Detroit and Bill Campbell of Atlanta.
"I don't want to indicate the substance of conversations or who's in consideration or who's not," he said. But he added that he was "exploring interest levels" in the HUD post.
Archer's spokesperson, Anthony Neely, said the mayor intends to remain in Detroit - "Period."
"The mayor has consistently indicated that while he is gratified by the suggestion of being a cabinet secretary, he has no intention of leaving Detroit," Neely said.
Some administration officials have been backing Cisneros to become chair of the Democratic National Committee. Cisneros discounted that, saying "I have no settled plans."
There has been speculation for weeks that Cisneros might leave, in part because of the investigation into whether he lied to the FBI about payments he made to Linda Medlar. Cisneros did not mention the controversy in his letter.
"I have worked the last four years to advance your hopes for America's communities," Cisneros told Clinton. "I have constantly grown in my respect for the clarity of your vision for the American future, for your judgments and for your tireless dedication."
He also said he hasn't determined when or whether he would return to his home town of San Antonio.
"I really need to address these financial questions. I need to work hard over the next few years," Cisneros said. "Just as this decision was driven by the need to meet personal obligations, so will the timing of returning to San Antonio."