Rouhani faces five other - mostly conservative - challengers during Friday's presidential race, and particularly strong competition from cleric and judge Ebrahim Raisi who has the backing of hardliners in the regime.
Raisi's popularity has risen steadily in recent weeks and Qalibaf's move should give him a last-minute boost against Rouhani, who has eased Iran's worldwide isolation though failed to spur a sluggish economy.
"I ask all my supporters to contribute their full capacity and support for the success of my brother, Ebrahim Raisi", Qalibaf said in a statement announcing his withdrawal, according to the state TV.
Raisi, a 56-year-old Shiite cleric, has close ties to Iran's supreme leader, Ayatollah Ali Khamenei, who last year appointed him as head of Iran's largest charitable foundation, the Astan Quds Razavi.
The incumbent president also directed rhetoric against the other contender, Ebrahim Raisi, arguing that the latter should not have made accusations against the government over corruption.
"I thank and praise all my popular and unpretentious supporters, who have striven toward realization of the revolution's ideals with all they have", he concluded. "He did a revolutionary act". "A man who should be on trial for the most heinous crime in contemporary Iranian history, is instead seeking the presidency", said Hadi Ghaemi, the executive director of the New York-based Center for Human Rights in Iran (CHRI).
Some conservatives had been unhappy that Qalibaf was standing again and risking a split in the anti-Rouhani vote. "And also there are conservatives who support Rouhani", the senior research fellow of the Department of Near and Middle East at the Institute for Oriental Studies of the Russian Academy of Sciences said.
"What is important now and vital is preserving the interests of the people, the country and the revolution and this can not be achieved in any way other than a change in the current situation", Ghalibaf said, according to the semi-official Fars news agency.
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Recent polls put Rouhani with a comfortable lead over Raisi, but such surveys are unreliable in Iran, which limits political activity and free expression.
Iran's 12th presidential election candidate, Mohammad Baqer Qalibaf (2nd L), attends a gathering of his supporters in the northern Iranian city of Rasht, May 15, 2017.
Rouhani has stabilised the Iranian economy and brought down inflation but unemployment is high and his opponents have questioned whether his administration has done enough to bring tangible economic benefits to the country.
"Some want to reinstate the former government through promises that can not be honored", Rouhani said, urging his critics to reveal the financial resources with which they intend to implement their economic pledges for the nation.
In 2005, Mahmoud Ahmadinejad defeated his moderate rival, Hashemi Rafsanjani, and became president.
"We will use Qalibaf's experiences and his managerial capabilities in the next government", Tasnim news agency quoted Raisi as saying on Monday. The two campaigned together on Tuesday, appearing at a packed rally in Tehran, where Raisi promised Qalibaf an important role in his administration.
Raisi and Qalibaf were following the same campaign tactics, criticising Rouhani's economic record and his policy of detente with the West.
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