Ali was the last significant figure known to be planning to run. Unless someone steps forward by Monday, the deadline to enter the race, el-Sissi could be the sole candidate.
El-Sissi, who submitted his formal candidacy documents earlier Wednesday, was always considered virtually certain to win a second, four-year term no matter who ran against him. But the past weeks have seen a string of would-be contenders who could have garnered a notable protest vote drop away.
One of them, a retired general and former chief of staff, was detained by the military on Tuesday for investigation on a slate of charges, including forgery and incitement against the armed forces.
Ali, a major left-leaning figure in the 2011 uprising that toppled autocrat Hosni Mubarak, told a news conference at his campaign headquarters in downtown Cairo that he would not enter the race.
"People's confidence that this election can be transformed into an opportunity to have a new start has, in my view, regrettably ended," he said.
He said many of his supporters outside Cairo have been arrested and convicted on terror charges he called "ridiculous." He said poor Egyptians had been bribed to sign documents supporting el-Sissi's candidacy and that the election commission had ignored some of his campaign's requests, including one for the removal of billboards declaring support for el-Sissi that have sprang up before the official start of campaigning.
"All indications pointed to a premeditated intention to poison the entire process and empty it of its supposed democratic content," he said.
Ali's candidacy was already at risk. Soon after he announced his plans to run last year, he was tried and convicted in September on public obscenity charges - for giving a middle finger during celebrations outside a Cairo courthouse months earlier following a ruling against the government's agreement to cede control of two strategic Red Sea islands to Saudi Arabia.
If his conviction is upheld on appeal, Ali would be ineligible to run. The next appeal hearing is on March 7.
Under the constitution, any potential candidate must secure 25,000 "recommendations" from voters or the support of 20 lawmakers to be eligible to run. El-Sissi already has the support of more than 500 of parliament's 596 lawmakers, but there has been a fervent campaign to top that off with voter recommendations as well.
On Wednesday, his official Facebook page posted images of workers unloading boxes of recommendations from a van, each bearing the president's image and the slogan "Long live Egypt!"
If only el-Sissi runs in the March 26-28 election, it would resemble the one-candidate referendums that confirmed presidents with "yes" votes routinely over 95 percent during decades of authoritarian rule in Egypt, starting with the establishment of the republic nearly 70 years go.
Beside Ali, two would-be challengers have withdrawn from the race and another two have been arrested, including the former military chief of staff, Sami Annan.
Asked about Annan, U.N. spokesman Stephane Dujarric said the world body was concerned about his arrest.
"We urge the authorities in Egypt to ensure that the election campaign is conducted in a credible, inclusive, peaceful and participatory manner in full compliance with the existing law," Dujarric said.
Also Wednesday, Amnesty International said Annan's arrest was an attack on rights to public participation and freedom of expression. "It is clear that the Egyptian authorities are hell-bent on arresting and harassing anyone who stands against President el-Sissi," said Najia Bounaim, Amnesty's North Africa Campaigns Director.
"This is consistent with the Egyptian government's ongoing efforts to crush dissent and consolidate power by attacking civil society, activists and human rights defenders in the country."
Since el-Sissi led the 2013 military overthrow of Islamist President Mohammed Morsi, the government has arrested thousands, mainly Islamists as well as secular pro-democracy activists.
In his first public comments since Annan's arrest, el-Sissi on Wednesday reiterated vague warnings that Egypt is the target of a foreign conspiracy.
"The evil people are still trying to achieve their goal and all eyes are on Egypt, but no one will hurt Egypt," he said at a televised ceremony marking Police Day.
"We don't want anyone to lead us astray with rhetoric that we don't need," he said, in what may have been a reference to Annan's video message announcing he would run.
In the video, Annan spoke of deteriorating living standards and the "erosion" of the state's capabilities, which he blamed on the military's growing involvement in the economy and politics. He also appealed to the military and state institutions to remain neutral in the election, saying they should not be biased in favor of el-Sissi.
With Annan's arrest, the military cited his message as incitement trying to cause divisions between the people and the armed forces.
Associated Press writer Edith Lederer contributed to this report from the United Nations, New York.
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