Speculation has persisted that Koike, a former LDP member and defence minister, would resign to run for a seat in parliament needed to make a bid for the premiership.
"I have been saying I will not run for the election from the beginning," Koike said in an interview with the Yomiuri newspaper reported on Tuesday.
"I'm 100 percent not running for the election."
If Koike does not personally contest this election, then analysts believe she would hope her party positions itself to win the next national poll, and that she gains a voter boost from the 2020 Tokyo Olympics.
Abe announced the snap election last week in hopes his Liberal Democratic Party-led coalition would keep its majority in parliament's lower house, where it held a two-thirds "super majority" before the chamber was dissolved.
But Koike's new "Party of Hope - launched just last week as a "reformist, conservative" alternative to Abe's equally conservative LDP - has clouded the outlook amid signs voters are disillusioned with Abe after nearly five years in power.
Koike's dilemma was whether to run for a seat now and face a backlash from voters for quitting as governor little more than a year since she defied the LDP to run successfully for the post, or risk letting a shot at the top job slip through her fingers.
Some analysts saw her decision not to seek a seat now as a sign Koike thinks her party's momentum was fading.
"She must have thought it would not be worthwhile abandoning the post of Tokyo governor to become a head of an opposition," said Tetsuro Kato, a professor emeritus at Hitotsubashi University.
LIBERALS NEED NOT APPLY
Koike has been getting negative media coverage for saying she would "exclude" candidates who do not agree with her party's policies - a stance seen as barring liberal members of the failed main opposition Democratic Party from joining.
Leaders of the Democratic Party - a fractious mix of conservatives and liberals - decided last week it would not run candidates of its own but let members run from Koike's party.
Koike's comment was applauded by some as an effort to ensure policy consistency but by others as a dictatorial manoeuvre.
"She's branding a very new party and has to make clear what it stands for, but the danger is that while Abe owned the 'arrogance of power' space, she is now vying for some of that," said Jeffrey Kingston, director of Asian studies at Temple University Japan.
Abe's support rates fell earlier this year due to suspected cronyism scandals and many voters' perception that he had grown complacent and arrogant after nearly five years in office.
His rating later rebounded but dropped again to 37 percent in the latest poll by public broadcaster NHK.
Koike's party is insisting those who want to run on its ticket sign a policy pledge, including revising the pacifist constitution and exercising the right of collective self-defence, or militarily aiding allies under attack-defence, a document seen by Reuters showed.
Many liberals balk at those policies.
Further complicating the outlook, liberals from the Democratic Party launched a Constitutional Democratic Party of Japan. The CSDP could split the opposition vote and help Abe's bloc keep its majority, but by how much is tough to predict.
"Koike is tough, she's resilient and she can tap into the fact that Abe's negative ratings are pretty high and a lot of people out there are unhappy with him," Kingston said.