Lieberman's poll ratings in his home state had slipped in recent years, encouraging Democratic challengers and sparking speculation about the senator's retirement. Lieberman's colleague, Dodd, recently retired from the Senate.
Hours before Lieberman's plans became public, former Connecticut Secretary of the State Susan Bysiewicz said she'll run in 2012 for Lieberman's seat.
Two Connecticut House Democrats, Chris Murphy and Joe Courtney, are also considering a run. Republican Linda McMahon is also seen as a potential challenger, despite losing her Senate bid last year against Democrat Richard Blumenthal.
There had been speculation about whether Lieberman would run in 2012 as a Democrat, Republican or independent.
After the 2008 election and at Obama's urging, Senate Democrats decided not to punish Lieberman for supporting the GOP ticket. They voted to let him keep his chairmanship of the Homeland Security and Governmental Affairs Committee. Obama was eager to strike a bipartisan tone for his presidency.
Two years ago, some state Democrats wanted to censure Lieberman for his actions. Ultimately, he was sent a stern letter. Since that time, he has had scant interaction with the party.
Lieberman told The Associated Press late last month that he was considering whether to seek another term in the Senate.
"It's a difficult decision for me because I really have loved my service here in the Senate, and I feel privileged to be here," he said. "I guess the question is — and I think you've always got to ask is — 'Now, after 22 years, 24 years after this term is over, do I want to do it again? Or, do I want to try something else?' That's the question you've got to answer."