But a copy of the coalition agreement obtained by Agence France-Presse indicated that he was able to extract a high price from the conservatives in the final round of talks including control of the powerful finance and foreign ministries, as well as the labor, family affairs, justice and environment portfolios.
Schulz had already announced on February 7 that he would resign as SPD chairman to become German foreign minister, triggering widespread criticism as he had promised ahead of the September election that he would not serve in a new government led by Chancellor Angela Merkel. "For that reason, I declare that I won't enter into the federal government - and at the same time sincerely hope to put an end to the personnel debate within the SPD".
Meanwhile Alice Weidel, the head of the far-right AfD's group of MPs in the new parliament, criticised the coalition's proposed immigration policy, which would see up to 220,000 asylum seekers given residency each year and a scheme to encourage highly-qualified people to move to Germany. At 153 MPs against Merkel's 246, the SPD are very much the junior partner in the coalition.
SPD leader Martin Schulz then abandoned his post-election vow to renew the party in opposition - a U-turn that angered many.
Christian von Stetten, a lawmaker from Merkel's own Christian Democrats (CDU), said the allocation of cabinet posts, and the finance ministry in particular, had been "a political mistake".
Tensions are also reported between him and Sigmar Gabriel, an SPD colleague who is now foreign minister.
The shock announcement comes just days after Merkel's conservatives and the SPD agreed to form a coalition government.
"The way in which Schulz left could make it hard to quickly focus on the party's achievements in the coalition talks", Carsten Nickel, a Brussels-based analyst at Teneo Intelligence, said in an e-mail response to questions.
Social Democrat won't take the job after coming under pressure over coalition deal.
However, the agreement needs to be approved in a vote by over 460,000 members of the Social Democrats. The results will be announced on March 4, according to party officials.
Disgruntlement among the SPD's base seemed to have spread to Merkel's CDU, where delegates were openly airing their frustration about the coalition deal. He told broadcaster SWR that he expected a minority government to take charge in Germany, at least for a few months, if SPD members heeded his call. Merkel's party will also cede the interior ministry to its Bavarian sister party, the Christian Social Union.