Speaking to the Washington Post, Trump said “We couldn’t get one Democratic vote, and we were a little bit shy, very little, but it was still a little bit shy, so we pulled it.”
The last-minute retraction is seen as a huge blow to the president.
Repealing and replacing the programme known as Obamacare was one of his major election pledges.
House Speaker Paul Ryan said he and Trump agreed to withdraw the vote, after it became apparent it would not get the minimum of 215 Republican votes needed.
Republicans currently have a majority in both the House and the Senate.
However, multiple reports suggested that between 28 and 35 Republicans were opposed to President Trump’s draft American Health Care Act.
Some were said to be unhappy that the bill cut health coverage too severely, while others felt the changes did not go far enough.
The bill also appeared unpopular with the public – in one recent poll, just 17% approved of it.
Speaking after the withdrawal, Trump repeatedly said Obamacare would “explode”.
However, he refrained from criticising Ryan, whose job as house speaker involves rallying support for controversial bills.
Trump said: “I like Speaker Ryan. I think Paul really worked hard.”
Ryan also told reporters the president had been “really been fantastic”.
President Trump said the Republicans would probably focus on tax reform for now, reports the BBC.
“We have to let Obamacare go its own way for a little while,” he told reporters at the Oval Office, adding that if the Democrats were “civilised and came together” the two parties could work out a “great healthcare bill”.
“We learned about loyalty, we learned a lot about the vote-getting process,” he said.
Trump said he believed the Democrats would “reach out when they’re ready”
Earlier Ryan told reporters: “We are going to be living with Obamacare for the foreseeable future.
“I will not sugar coat this. This is a disappointing day for us. Doing big things is hard.
“We were a 10-year opposition party where being against things was easy to do,” he said, adding that it was difficult to get “people to agree with each other in how we do things”.
Meanwhile, Democrat and House minority leader Nancy Pelosi described the retraction as “a victory for the American people”.
And House Minority Whip Steny Hoyer said it was a “good day” for Americans, adding “we worked over years to assure that the American public would have access to affordable, quality healthcare”.