He said he had not taken his decision lightly but due to multiple professional commitments, felt he could not give the campaign or role the full-time attention it deserved.
He is also Sevens referee manager with World Rugby and has commitments to the ILT Board and the Hawthorndale Care Village project.
Mr O’Brien said being a city councillor was a demanding role which required commitment and focus.
"I would encourage other leaders in our community to step forward and take the opportunity to represent our community with integrity and commitment."
Invercargill City Council had not, as yet, received any official nominations for the by-election.
However, Wayne Harpur — who announced his intentions for council in October — said his candidacy was "on track" but admitted he had not completed the paperwork.
David Pottinger, brother of councillor Ian Pottinger, had also confirmed his intentions to stand.
Mr Pottinger said he had the documentation and would complete his nomination at the weekend.
Nominations for Invercargill city council’s by-election close on December 22.
