The West Midlands MEP and former Southampton chairman said he feared that by standing he could allow the Labour candidate to win the seat.
Mr Lowe said: "It is with a heavy heart I have decided not to contest Dudley North as a Brexit Party candidate.
"I am putting country before party as it is highly conceivable my candidacy could allow Corbyn’s Momentum candidate to win.
"They are simply not fit to govern."
It is believed the timing of Mr Lowe's decision means it is too late for the Brexit Party to select another candidate, with nominations now closed.
It is a major blow for Brexit Party leader Nigel Farage, who cancelled his rally in Dudley on Friday where he had planned to endorse Mr Lowe.
The party is now left with no candidates in the town after Paul Brothwood pulled out in Dudley South to back the Tories.
Aaron Hudson was ordered not to stand in Stourbridge for the Brexit Party, after Mr Farage pulled out of 317 Tory held seats.
He is now standing as an independent, as is another former Brexit Party candidate John Cross in Halesowen and Rowley Regis.
Dudley North is one of the Tories top target seats at the election. It was held by Ian Austin in 2017 by just 22 votes. He has since quit Labour, stood down and endorsed the Tories.
Here's Mr Lowe's statement in full:
After much deliberation and with a heavy heart, I have decided not to contest Dudley North as a Brexit Party candidate.
I am putting country before party as it is now highly conceivable that my candidacy could split the vote, facilitating the election of Labour candidate Melanie Dudley.
I believe that if the Labour Party were to be elected in the forthcoming election, Jeremy Corbyn and John McDonnell with Momentum behind them will devastate Britain and destroy all that decent people have achieved through their hard work and enterprise.
They are simply not fit to govern and Momentum is the most sinister development in recent British politics, mirroring the beginnings of the Communist Party in the USSR.
Witness the chaos in Venezuela, which despite its massive oil reserves, is riven with poverty, injustice and instability.
British politics is broken and urgently needs to go through a period of extensive change. The knowledge revolution has dramatically changed the economic infrastructure but our political superstructure has barely evolved.
This has become very apparent to the British people.
The undemocratic failure to deliver the on the result of the 2016 referendum followed by the duplicitous and incompetent negotiation process pursued by Theresa May, have resulted in the current unsatisfactory plans for Brexit.
Since I have had the opportunity of dissecting both domestic and European parliaments, any belief I may have had in representative democracy has evaporated.
We need to urgently change politics by moving towards a much more direct democracy.
I would like to say a big thank you to the people of Dudley North. Unlike many areas of the southern metropolitan elite, they still have a proud, traditional, cohesive local community which they should cherish and protect.
I wanted to offer them an option to vote for somebody outside the political establishment who would act as an agent for radical change.
The BBC, FCA, student loan interest, HMRC, the Electoral Commission, postal voting system, unaccountable Government quangos and much more all need to be brought to account in the interests of the voting public.
Finally, I would like to thank Nigel Farage whose energy, vision and honesty has given hope to many.
He deserves to be given more credit for his role in exposing the dangers of our gradual, opaque descent into a protectionist post war European experiment that can only fail.