Carol Moseley-Braun was the first and so far the only African-American woman elected to the US Senate, where she served only one term.
She announced her intentions yesterday to supporters holding placards saying "Ms President".
Her declaration swells the number of those seeking the nomination for the November 2004 election to eight, and there are at least five more still considering a challenge.
She is the third Democratic contender this week, following the Ohio congressman Dennis Kucinich on Tuesday and the former Democratic leader of the House Richard Gephardt, who put his name forward yesterday.
She and Mr Kucinich, joint chairman of the leftwing congressional progressive caucus, are both opposed to a war on Iraq. Although neither is expected to win, their candidacy suggests that there is a growing frustration with their party's failure to challenge the administration on the issue.
The only other anti-war candidate is the governor of Vermont, Howard Dean, but Senator Bob Graham of Florida, who is also against military action, is expected to declare his intention to stand soon.
"I am a budget hawk and a peace dove," Ms Moseley-Braun told supporters on Tuesday.
"The unilateral attempt to take military action against Iraq is not in the interest of our long-term security. And the budget deficit is another matter. We have no right to saddle our children with our debt and our bad decisions."
Ms Moseley-Braun said she was seeking the nomination "because I want to be a voice of hope for people who believe war is not the answer to our domestic security, and budget deficits are not a way to grow this economy".
Mr Kucinich is the only member of Congress seeking nomination to have voted against the resolution authorising the use of military force in Iraq.
Declaring his intention to a union meeting in Iowa, he stressed a populist economic agenda which included universal healthcare, repeal of the North American Free Trade Agreement, and elimination of President George Bush's tax cuts.
"There's something fundamentally wrong with the direction this country is heading in," he said. "I'm stepping forward because someone has to say, 'Hold it! Everything needs to be changed at every level of society.' "
Dick Gephardt, a sometime leading figure in the Democratic party whose star has waned in recent years, vowed to fight primarily on issues relating to the economy.
"Bush has taken us right back to the broken policies of the past, the economics of debt and regret: unaffordable tax cuts for the few, zero new jobs, surging unemployment," he said.
"Never has so much been done in so little time to help so few."
Ms Moseley-Braun, 55, was elected to the US Senate in 1992 by Illinois, a key swing state. But she lost her campaign for a second term in 1998 after being accused of spending campaign funds on herself and her boyfriend, and because of her close ties with the Nigerian dictator Sani Abacha. She then became ambassador to New Zealand.
Her candidacy could have a decisive impact on the contest, since she appeals to the Democrats' two core constituencies: African-Americans and women.
"It's going to be tough," said Ron Walters, who teaches political science at the University of Maryland.
"She is going to have to do a lot to establish name recognition across the country ... I think she is well known in the black community, but not outside. She's going to have to have a significant amount of money if she is going to be viable, and I don't think she can raise a lot of money."
There is speculation that one of her primary reasons for standing is to frustrate the prospects of the only other African-American contender, the Rev Al Sharpton, who is regarded unfavourably by the Democratic party leadership.
Many Democratic leaders have expressed concern that Mr Sharpton's strong connection to the party's most loyal base, African-American voters, could give him a considerable advantage. More than 80% of African-Americans vote for the Democrats, who have won the presidency without the black vote only once since the second world war.
Those who tried and failed
1872 Victoria Woodhull (Equal Rights Party) performed spiritual healing acts in parents' travelling medicine show. Financed her presidential campaign from her private fortune as the first woman Wall Street stockbroker. Believed in 'free love' and right of women to have extra-marital affairs, practising what she preached. Her running-mate was the black rights advocate Frederick Douglass,who refused to campaign with her because of her radical views
1884, 1888 Belva Lockwood (Equal Rights Party) was another groundbreaker, a lawyer who fought for women's rights and native Americans. First woman to argue a case before US supreme court
1964 Margaret Chase Smith (Republican Party) was the first woman to seek the nomination of a major party, standing as a moderate Republican against the white backlash vote led by Barry Goldwater. Congresswoman, senator, and the first Republican to speak out against McCarthyism
1972 Shirley Chisholm (Democrat), a Brooklyn teacher, the first black woman elected to Congress, made a serious bid for the nomination
2000 Elizabeth Dole (Republican), senator and wife of Bob Dole, tried to use southern charm and talkshow-style rallies. Pulled out before the party convention