Schatz said in a statement that Inouye had "graciously" informed her of plans to support Hanabusa in a conversation last month.

"I told Mrs. Inouye that I understood her decision, and assured her that, as Hawaii's Senator, I will continue doing everything in my power to honor Sen. Inouye's memory and accomplishments," Schatz said. "As for my work in the U.S. Senate and on this campaign, I will continue to focus on building an even stronger, more prosperous future for Hawaii,  and do so grounded in our state's unique and time-honored traditions."

Hanabusa officially launched her bid on Thursday, after initially weighing a run for the governor's mansion.

"I've made no secret of the fact that I have been considering my options for 2014. While it has been an honor and a privilege to serve the people of the First Congressional District and I have always done so to the best of my ability, I believe that I can do more to serve our state," she said in a statement.

While Hanabusa has better name recognition and the backing of labor groups in the state, the Democratic Senatorial Campaign Committee is backing Schatz. 

Schatz issued a statement Friday welcoming Hanabusa to the race.

"As someone who grew up in Hawaii and today is raising his own family here, Senator Schatz is deeply invested in our state's future. In his first few months in the Senate, he has forged meaningful relationships, leveraged his budding Senate seniority, advanced legislation, and fought for initiatives that will positively impact Hawaii and the people of our state," campaign spokesman Bill Meheula said.

—Alexandra Jaffe contributed. This story was updated at 12:30 p.m.