The 34-year-old had hoped to represent Switzerland and win his first singles gold medal, but has taken medical advice to rest so he can properly recover from February's knee surgery.
"The doctors advised that if I want to play on the ATP World Tour injury-free for another few years, as I intend to do, I must give both my knee and body the proper time to fully recover," he said on his Facebook page Tuesday.
Federer had long been renowned for his lack of injuries, but back and knee problems have hampered the 17-time major winner in recent times.
The world No. 3 has played only seven tournaments in 2016, with his most recent appearance a semifinal defeat at Wimbledon this month.
"It is tough to miss the rest of the year," he said. "However, the silver lining is that this experience has made me realize how lucky I've been throughout my career with few injuries.
