Mr O'Malley, who is also a former mayor of Baltimore, joins Hillary Clinton and Bernie Sanders in the primary race ahead of the 2016 US election.
"I'm running for you," Mr O'Malley told a crowd of around 1,000 people in Baltimore on Saturday.
He also pointed to his work as governor on issues such as gay marriage, immigration and income inequality.
"My decision is made. Now you will all have a vital choice to make next year, for the good of your families, and for the good of the country you love and carry in your hearts," he added.
The Democratic National Committee said it welcomed a candidate who had shown "solid commitment" to social justice.
Mr O'Malley, who endorsed Hillary Clinton's unsuccessful run for the Democratic nomination in the 2008 election, said that his party deserved a wide choice of candidates.
"The presidency is not a crown to be passed back and forth between two royal families,'' he said, referring to Republican and Democratic nominees Jeb Bush and Ms Clinton.
He said that he was joining the race for nomination because there was "urgent work" needed "to rebuild the truth of the American dream for all Americans."
US 2016: Meet the possible candidates
A few demonstrators gathered near his speech to protest against Mr O'Malley's criminal justice policies as Baltimore mayor.
"He's claiming to be this saviour of Baltimore, but he's not," protestor Duane Davis told The Associated Press.
Mr O'Malley has defended his previous "zero-tolerance" policies, saying that they helped tackle violent crime.
Critics have said that they contributed to the distrust between the police and the local black community.
Riots erupted in the city in April after the death of Freddie Gray while in police custody.

The weakness in the oil and gas market has resulted in £2.56bn turnover between January and June, down from £3.07bn at the start of 2015.
Profits fell even faster. Pre-tax profits on continuing operations were down by 39% to £96m.
However, that does not include exceptional items. Post-tax reported profit was down 68% to £44m.
The company has had one-off costs of cutting back sharply on its overhead costs, shedding a 10th of its workforce in the first half of this year.
Wood Group is currently in a pay dispute with maintenance workers on Shell platforms in the UK North Sea.
Chief executive Robin Watson said: "We have continued to focus on what we can control and what we can manage during a period where lower oil prices have endured and activity has fallen.
"Our focus remains on managing costs, improving efficiency and maintaining capability. We are working with our customers to work smarter, streamlining work processes while increasing quality and efficiency."
The engineering firm has told investors it expects full year profits to be 20% lower than in 2015.
The outlook was helped, it said, by early signs of oil production projects being given approval, and signs that the sharp drop in North American onshore drilling may have bottomed out.
Wood Group has also announced a $700m multi-year contract for oilfield automation services in Kazakhstan. This continues work it has been doing there for Tengizchevroil since 2013.
In other energy news, Cairn Energy, based in Edinburgh, announced a significant increase in the estimated size of its oil discovery in Senegal.
An independent company has assessed it as containing 473 million barrels of potentially recoverable oil or its gas equivalent, and up to 2.7 billion in total in the field.
The company said the new North Sea fields in which it has a significant interest, Kraken and Catcher, remain on schedule to be in production by the end of next year. The downturn in the oil market means the capital expenditure behind them has fallen between 10% and 20%.
The Wood Group share price rose 2% in morning trading after its half-year results were announced. Cairn Energy was up nearly 3%.
Former Maryland Governor Martin O'Malley has announced his bid for the Democratic presidential nomination.
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Wood Group, the oilfield services firm based in Aberdeen, has reported half year revenue falling 17%.