He had held faint hopes of recovering for the year-ending championships at the O2 Arena, but has been forced to concede defeat in his race to be fit before the end of the season.
"It's disappointing for me to miss the last two tournaments of the season in Paris and London, but it doesn't come as a surprise," Nadal said. "I will hopefully resume my tennis practice soon since I am making good progress with my recovery from injury.
"I am not ready to compete in time for these events so I will continue my recovery in Mallorca and work hard to be back as soon as possible."
Nadal is expected to play at an exhibition event in Abu Dhabi at the end of December as he prepares to make his comeback in Doha ahead of the Australian Open in January.
"We wish Rafa all the best as he continues his rehabilitation from injury," ATP president Brad Drewett said. "Rafa is an incredible champion and it goes without saying that he has been missed on the ATP World Tour over the past few months. We look forward to welcoming him back on the tour very soon."