The 64-year-old Figueroa, three times South American Player of the Year in the 1970s, had been the choice of a group called Change FIFA to stand against Blatter and Asian Confederation chief Mohamed bin Hammam in the June 1 vote in Zurich.
"I have decided not to accept... for the sole reason that I'm sure with such a short time in which to state a case I could not prepare one worthy of the magnitude and importance of such a distinguished job," Figueroa said in a statement on Wednesday.
The former central defender, who shone for Penarol of Uruguay and Brazil's Internacional and played in three World Cups, said last week he was considering Change FIFA's proposal and that there was backing from a national football association.
Figueroa did not reveal which association was involved but Change FIFA criticised Chile's ANFP for not supporting him.
"We are surprised that the ANFP should not want to name Elias. If they did so it was be big news... How can they treat their idols with such disrespect?" Oliver Fowler, a member of Change FIFA, was quoted as saying in the Chilean newspaper El Mercurio.
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