Mr Cunliffe made the widely anticipated announcement at a press conference at his electorate HQ in New Lynn, Auckland this afternoon, where he was welcomed by a large crowd of supporters.
Mr Cunliffe said he made the decision carefully after talking to colleagues, supporters and family.
He said he believed he could bring together a party and form a government that provides a fair voice for fairness, inclusion and prosperity for all.
"There is a strong sense that now is the time for a new beginning for Labour and New Zealand,'' he said.
"The time has now come for Labour to rise up and join with our communities to build this strong and fair New Zealand.''
Mr Cunliffe is the third MP to confirm their place in the contest to replace David Shearer, with Grant Robertson and Shane Jones already announcing their candidacy.
The deadline for hopefuls to register is 10pm tonight.
Mr Cunliffe first entered Parliament in 1999, as MP for the Auckland electorate of Titirangi.
In 2002 he kept the electorate seat, renamed New Lynn, and came to prominence in Helen Clark's second government.
He was made associate minister of finance and revenue in 2003 and minster of communications and information technology the following year.
Mr Cunliffe retained the New Lynn electorate in 2005 and was rewarded with the immigration and economic development portfolios.
In 2007 he was made health minister, a further sign that his stock was rising further.
Despite Labour's loss at the 2008 general election, Mr Cunliffe was promoted by new leader Phil Goff from 31 to 8 on the party list and made finance spokesman.
During this time rumours of Mr Cunliffe's leadership ambitions continued to swirl. Labour's loss at the 2011 general election gave him the chance he wanted.
After Mr Goff stood down, Mr Cunliffe ran for the Labour leadership against Mr Shearer, Mr Robertson and David Parker.
Mr Robertson and Mr Parker eventually dropped out of the race and backed Mr Shearer for the position, who kept Mr Cunliffe on in a senior role after the election.
Last November, Mr Cunliffe was demoted by Mr Shearer due to his leadership challenges. Mr Cunliffe was reluctant to back Mr Shearer publicly, which Mr Shearer saw as a sign of his leadership being undermined.
Mr Cunliffe said his first duty would be to bring together the strengths of the caucus and the party.
"Our people need us to win now. Now is the time for a new beginning and I'm ready to play my part.''
