WASHINGTON (CNN) -- Gov. Sarah Palin announced Friday that she will step down as Alaska's chief executive by the end of the month. She will not seek election to a second gubernatorial term in 2010.

"People who know me know that besides faith and family, nothing's more important to me than our beloved Alaska," Palin said at an announcement from her home in Wasilla. "Serving her people is the greatest honor I could imagine."

Palin, a Republican, was elected governor in 2006. She was tapped as Arizona Sen. John McCain's vice presidential running mate last year.

Palin said she was transferring authority to Lt. Gov. Sean Parnell, who will be sworn in at the Governor's Picnic on July 26.

A Republican source close to her political team told CNN's John King that it was a "calculation" she made that "it was time to move on." The governor's "book deal and other issues" were "causing a lot of friction" in her home state, the source said, adding that he believes she is "mapping out a path to 2012."

Following Palin's announcement, the Democratic Nationanl Committee blasted what it called her "bizarre behavior."

"Either Sarah Palin is leaving the people of Alaska high and dry to pursue her long shot national political ambitions or she simply can't handle the job now that her popularity has dimmed and oil revenues are down," DNC spokesman Brad Woodhouse said.

"Either way, her decision to abandon her post and the people of Alaska who elected her continues a pattern of bizarre behavior that more than anything else may explain the decision she made today."

As the 2008 Republican vice presidential nominee, Palin has been considered one of the front-runners for the GOP nomination in 2012. Her decision not to seek another term as governor is sure to stoke speculation that Palin is seriously eyeing a run for the White House.

In an interview last month with CNN's Wolf Blitzer, Palin said she was unsure about her re-election bid because she needed to focus on her state and her family.

"So, no decision yet on either 2010 or let alone 2012?" Blitzer asked.

"No decision that I'd want to announce today," Palin responded.

Palin catapulted on the national stage last August when McCain, the Republican presidential nominee, chose her as his running mate.