The magneto-rotational instability (MRI) is currently the best candidate for supplying the anomalous viscosity required to drive accretion in protoplanetary disks. However, most past studies have examined the MRI under ideal MHD conditions, or considered only Ohmic dissipation. We show that the inclusion of dust grains and the effects of ambipolar diffusion can strongly suppress the MRI. The resulting accretion rates are at least an order of magnitude lower than observed, indicating that substantial grain growth and settling is required for the MRI to be a viable mechanism. Moreover, the accretion is also spatially and temporally variable, producing over- and under-densities in the disk that have strong implications for planet formation and migration.