Prime Minister Benjamin Netanyahu informed Israel's president Monday he could not form a new government following deadlocked September elections, making way for his opponent Benny Gantz to try.
Netanyahu, leader of the Likud Party, which failed to govern a majority in the latest elections, has announced the mandate will return to Reuven Rivlin.
Netanyahu argued that he had "made every effort to bring Benny Gantz to the negotiating table, every effort to form a broad national government, every effort to prevent further elections". Netanyahu or Gantz could be in the running again at this point.
Netanyahu's decision to cut short his efforts leaves the country's political future - and his own - uncertain. Israeli Arab lawmakers pledged their backing, but Mr Gantz remained more than a dozen of seats short of a governing majority.
Gantz's Blue and White party said in a statement it was "determined to form a liberal unity government".
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Though Gantz will be tasked with forming a government, Netanyahu remains as prime minister until a new government is formed.
The move does not necessarily end Netanyahu's chances of leading the country's next administration.
Netanyahu, who has been in power for the past decade and 13 years in total, has seen his political strength wane as he faces a looming indictment on corruption allegations that he denies.
The towering former general's party, Blue and White, is a newly formed centrist coalition that includes the popular secular politician Yair Lapid as well as other former senior military officers and some of Mr Netanyahu's fiercest critics.
He also has hinted at reviving the peace process with the Palestinians. These dates are assuming that Gantz would take the full 28 days trying to form a government, which means that the mandate could go to the Knesset at an earlier time. If he can not, a gridlocked Israel faces the prospect of having to hold a third election in the span of a year - with little sign of an end to its political impasse.