"While holding the race would not require diverting resources from the recovery effort, it is clear that it has become the source of controversy and division," Mayor Michael Bloomberg said in a statement. "We would not want a cloud to hang over the race or its participants, and so we have decided to cancel it."
Bloomberg had said earlier that he hoped to lift spirits and unite the stricken city with the marathon, but many argued that going ahead with the 26.2-mile race would be insensitive and divert city resources at a time when many are suffering.
"If it's not unifying, it's not the marathon," said Dep. Mayor Howard Wolfson. "If all of New York is not behind it as we are ever year, it's not the marathon we know."
An estimated 40,000 runners from around the world were expected to take part.
"We cannot allow a controversy over an athletic event -- even one as meaningful as this -- to distract attention away from all the critically important work that is being done to recover from the storm and get our city back on track," Bloomberg said.
While many runners say they are disappointed, many others say they hope their race fees will go to the victims of the storm.
The death toll from Sandy has risen to 105, with 41 in New York alone. That number could grow as search efforts continue. More 3.8 million homes and business in the East were still without power, down from a peak of 8.5 million. Bloomberg said Con Edison hoped to resolve most Manhattan outages by midnight Friday, but in the city's outer boroughs, customers may not have electricity until mid-November.
Officials are taking a closer look at the damage on Staten Island, where two children died after they were trapped in a car in flood waters. Residents are picking through the damage and still coming to grips with the work ahead.
"We have hundreds of people in shelters," said James Molinaro, the borough's president. "Many of them, when the shelters close, have nowhere to go because their homes are destroyed. These are not homeless people. They're homeless now."
But there was one sign of progress in Staten Island as ferry service to Manhattan resumed. Water and food donations are finally getting into the devastated community. Food and water have been in short supply in the hardest hit areas, and garbage is starting to pile up. Some residents in Staten Island said help isn't reaching them fast enough, and they feel other areas are getting more assistance.
"Please listen to us down here. We are going to die. You don't understand. You got to get your trucks here on this corner now. This is three days," said Staten Island resident Donna Solli.
A relief fund is being created just for storm survivors on Staten Island, Molinaro and former Mayor Rudolph Giuliani said Friday. Homeland Security Secretary Janet Napolitano visited with relief workers and victims Friday, pledging help is on the way.
"We want to make sure that the right resources are brought here as quickly as possibly to help this community, which is so very strong, recover even more quickly," she said.
Another top Federal Emergency Management Agency official planned to tour the island.
Meanwhile, the other big complaint in the storm zone is the lack of gasoline. Because the power is out, many stations can't pump the gas, and others just don't have any. The result is long lines that stretch for miles and a lot of frustration for drivers.
Some drivers complained of waiting three and four hours in line, only to see the pumps run dry when it was almost their turn. Others ran out of gas before they reached the front of the line. Police have been assigned to gas stations to maintain order. In Queens, a man was charged Thursday with flashing a gun at another motorist who complained he was cutting in line.
Bloomberg promised that work is under way to get the region back on its feet.
"What we have to do is in memory of those that we lost, make sure that we build as quickly as we can and safely as we can, and have a future for those they left behind," Bloomberg said.
Transportation services are slowly getting back on the tracks. More subway and rail lines started operating again Friday, and the Holland Tunnel into New York was open to buses. Amtrack service is also running again.
In New Jersey, Gov. Chris Christie said Atlantic City's 12 casinos could reopen immediately after a nearly five-day shutdown.
You can help victims of the storm by sending relief checks for the American Red Cross to ABC7. Checks can be made out to: American Red Cross, with Sandy Relief in the memo line. Send checks to:
Superstorm Sandy Relief
P.O. Box 5967
Glendale, CA 91221
The Associated Press contributed to this report.