WASHINGTON -- New Mexico Gov. Bill Richardson withdrew yesterday from consideration as incoming commerce secretary, citing an ongoing federal "pay-to-play" investigation involving one of his political donors as a significant obstacle to his confirmation.

Mr. Richardson, 61, who competed unsuccessfully for the Democratic presidential nomination last year, becomes the first political casualty in President-elect Barack Obama's Cabinet, and his withdrawal marked the first visible crack in what had been one of the smoothest presidential transitions in modern history.

The former energy secretary and U.N. ambassador under President Bill Clinton was positioned to become the highest-profile Hispanic in Mr. Obama's administration. But Mr. Richardson made it clear yesterday that he believed confirmation was far from a sure thing, even with Democrats firmly in control of the U.S. Senate.

"Given the gravity of the economic situation the nation is facing, I could not in good conscience ask the president-elect and his administration to delay for one day the important work that needs to be done," Mr. Richardson said in a statement.

The New Mexico investigation, which began last summer, focuses on whether Mr. Richardson's office urged a state agency to hire a California firm as a result of generous contributions from the company and its president to groups with ties to the governor.

Mr. Richardson insisted that he and his staff "have acted properly in all matters" and predicted the investigation would exonerate him. But he said that could take weeks or months, potentially holding up his Senate approval. Instead, Mr. Richardson said he will remain "in the job I love as governor of New Mexico."

He called Mr. Obama on Friday to advise him of his plans, and the president-elect accepted the decision "with deep regret," according to a statement issued yesterday. Aides said no one in Mr. Obama's transition pressured Mr. Richardson to drop out.

Sources close to the transition said Mr. Obama would move quickly to find a replacement for Mr. Richardson at Commerce.

A grand jury in Albuquerque is looking into whether CDR Financial Products received a contract with the New Mexico Finance Authority because of pressure from Mr. Richardson or other state employees. CDR made $1.48 million advising the authority on interest-rate swaps and refinancing of funds related to $1.6 billion in transportation bonds, state officials confirmed.

The Beverly Hills-based firm and its president, David Rubin, together gave $100,000 to two Richardson organizations shortly before winning those lucrative state contracts, records show.

The investigation heated up last month, just around the time Mr. Obama announced Mr. Richardson as his choice for secretary of Commerce, according to sources familiar with the investigation. New subpoenas were issued and testimony was scheduled from officials at J.P. Morgan Chase, who worked for the state with CDR, and the director of Mr. Richardson's political action committees.

CDR's selection drew FBI interest because the firm did not make an initial list of the most qualified bidders. The bidding was reopened for review, and a state committee headed by one of Mr. Richardson's former top aides later helped select CDR.

A legal source familiar with the investigation said yesterday that FBI agents, working on the Senate's behalf and conducting a background check of Mr. Richardson for the Commerce job, conveyed to Mr. Obama's transition team the seriousness and significance of the Albuquerque grand jury investigation.

The agents are said to have communicated that the governor's top aides -- and even Mr. Richardson's own actions -- were under scrutiny. At least two sources familiar with the investigation said some evidence raises concern about the propriety of Mr. Richardson's administration interactions with a donor.

Obama aides declined to comment on any conversations the transition may have had with the FBI about the investigation.

The inquiry springs from a long-running nationwide investigation by the Justice Department into "pay-to-play" practices in local government bond markets. Federal investigators are questioning whether financial firms have lavished politicians with money and gifts in exchange for high fees on work advising municipal and local governments on investments.

The suddenness of Mr. Richardson's withdrawal renewed questions about the Obama team's vetting procedures. The New Mexico investigation had been publicized since last summer, yet aides to the president-elect said yesterday that they were not aware of the matter when Mr. Richardson was nominated. Richardson advisers insisted that the governor had relayed information about the investigation to transition officials before his name was announced.