The former minister for energy made the announcement at the MacGill summer school in Donegal where he criticised current government policy and political reform.
He said he had decided to contest the 2014 European elections, that he had seen the European parliament work at close quarters.
Mr Ryan said he wanted to be a “strong Irish voice” in Europe, one that had a “certain vision”.
His decision leaves in doubt who will take over the leadership of the party, which lost all its Dáil seatsin the last general election. Despite having city and county councillors in several parts of the country, the party has only received 2% of support in recent polls.
The surprise announcement by Mr Ryan, who also lost his seat at the last general election, comes as parties prepare to field candidates for the local elections which will also be held next year.
Mr Ryan said last night that if people wanted to reinvent the Republic, the theme of this year’s Donegal summer school, they needed to stand for election.
He said Taoiseach Enda Kenny’s doctrine that Ireland could become the best little country in the world to do business with would not create a new Republic. “I’m not too sure that is the new way,” he said.
Mr Ryan also argued that there had been no local government reform and that there was a need for directly elected mayors. He also defended the Seanad and criticised the Coalition’s plans to abolish the Upper House.
Earlier, novelist and Aosdana member Theo Dorgan criticised the Government’s “whimsical” proposal to close down the Seanad.
Leading historian Diarmaid Ferriter also criticised the Coalition’s plan to abolish the Upper House. Closing the Seanad would further copper fasten “a tiny elite” at the centre of Government, he argued.