Donnelly, R-Hesperia, issued a statement Wednesday describing his potential campaign as one that would be based on "small government, the rule of law, economic responsibility and freedom."
"I do not believe in abandoning our core principles in hopes of winning an election. I do believe in listening to the people of this state - people who have real ideas politicians haven't thought of," Donnelly said in the statement.
"Over the last decade, California has left a whole generation fleeing for greener pastures. With them goes opportunity for innovation and growth. I know we can do better," continued Donnelly, newly reelected to represent the vast 33rd Assembly District, which ranges from the San Bernardino Mountains to the Colorado River.
Forming an exploratory committee gives Donnelly a chance to consider the feasibility of running for governor before having to commit to the 2014 gubernatorial race.
Donnelly, who first announced his gubernatorial ambitions to the conservative website politichicks.tv earlier this month, would face long odds in California's political climate if he chooses to run for governor.
"If he got in, it would have to be by the hand of God, that's for sure," said Ross Lapham, an organizer for the San Bernardino County Tea Party.
Lapham said a Donnelly win "would be awesome," but he acknowledged such a highly conservative Republican would face a challenge in a state dominated by the Democratic Party.
Donnelly's announcement surprised the chairman of the San Bernardino County Republican Party and outgoing state Sen. Bob Dutton, R-Rancho Cucamonga.
"My reaction is, why would he run for governor? Why?" asked party chairman Robert Rego.
Rego said he doesn't understand what Donnelly thinks he can do from the Governor's Office that he cannot do in the Legislature.
Dutton questioned whether Donnelly could amass the millions needed to challenge Gov. Jerry Brown or whoever would run in the Democrat's place if he decides not to seek another term.
"I just don't think he has that strong of a ground game. I don't know if he can raise that kind of money," Dutton said.
Dutton himself lost a congressional race against fellow Republican Gary Miller this month. Miller and super PACs in support of his candidacy spent significantly more than Dutton on their way to winning the race.
California is on the verge of becoming a virtual one-party state as Democrats control all statewide elective offices and are poised to hold supermajorities in the Assembly and state Senate.
The California GOP's current weakness has aroused considerable debate among Republicans and pundits as to how the the party can bounce back.
One idea is that the Republican Party should at least moderate its tone on immigration in order to avoid alienating Latinos and other minorities who may otherwise be receptive to a conservative philosophy.
A Donnelly candidacy would be a repudiation of that idea.
During his first week as a legislator, Donnelly introduced an immigration law based on Arizona's controversial S.B. 1070, which required law enforcement officers in the state to verify the immigration status of anyone an officer suspects of being in the country illegally.
Donnelly also introduced a a bill seeking to reverse state law and force illegal immigrant students to pay out-of-state tuition rates at public universities and community colleges in California.
Both bills died in committee.
To a Tea Party conservative like Lapham, Donnelly's views are right in line with demands for tight immigration policies and smaller government.
"He's not anti-Latino. He's just anti-illegal immigration. He's also someone who would be fiscally responsible," Lapham said.
But Victorville Councilwoman Angela Valles said a Donnelly campaign would send the wrong message to California voters, especially Latinos the GOP needs to become more competitive.
"They feel that the Republicans are just being racists and I think that's the way people perceive Donnelly, because he's seen as a one-issue guy," said Valles, a Republican.
"I don't think he is racist. I think he is perceived that way," she added.
If he runs for governor, Donnelly would also be sure to be on the receiving end of attacks based on the January incident in which he was caught with a loaded handgun in his carry-on luggage at L.A./Ontario International Airport.
Donnelly has said he made an honest mistake and had taken to carrying a firearm after receiving death threats for his immigration views. He received a sentence of three years of probation and a $2,215 fine in March after pleading "no contest" to the charges.
Claremont McKenna College political scientist Jack Pitney said the airport incident is but one reason Donnelly has little chance of actually becoming governor.
"Once he explores, he may find out he's not going to be governor," Pitney said. "The chances of Tim Donnelly becoming governor are about as realistic as me becoming Mr. Olympia."
Staff writer Josh Dulaney contributed to this report.