Chairman David Parker returned late Saturday to the state Executive Committee meeting, where he said he won't leave.
He then pledged to continue leading the North Carolina Democratic Party.
"I thank you for your vote of support on this day," he said. "I will tell you that there have been a lot of phone calls made. But this is our party."
Earlier, he had submitted his resignation, but committee members voted 269-203 to reject it.
Gov. Beverly Perdue, Lt. Gov. Walter Dalton and others had wanted Parker to step down because they said he was a distraction in the wake of sexual harassment allegations at party headquarters.
A spokesperson issued the following statement on behalf of Democratic gubernatorial candidate Lt. Gov. Walter Dalton.
"The Lieutenant Governor is surprised and disappointed. David Parker had assured him that he would resign and assist in the smooth transition to a new chair. Clearly that did not happen."
However, Parker's allies didn't want him to leave.
At least three candidates were vying for the seat. One of them was Mary Ann Baldwin.
"I'm in shock," she said on Saturday. "What happened today, I didn't expect to see happen. I took David Parker for his word that he was going to resign. I never would've thrown my hat in if I thought otherwise. I don't think Don Vaughn or Frank Eaton would've either."
Baldwin said the vote was disorganized and used loopholes in rules.
Committee member Lloyd Scher of Mecklenburg County said Parker did nothing wrong in following the advice of the party's attorney in settling the allegations confidentially.
Once a bright spot for President Barack Obama, North Carolina is more like a political migraine now. And the ache is being felt less than four months before Democrats open their national convention in Charlotte.
"President Obama's chances at winning North Carolina continue to grow smaller by the day, said Republican National Committee spokesman Matt Connelly. "This vote is further evidence that the President's ground game and national convention are in absolute turmoil in the Tar Heel State."
There was no comment on Saturday from the Democratic National Committee.