The Spaniard had been due to compete in next week's Swiss Indoors Basel, where he was beaten by Roger Federer in last year's final, and the season-ending World Tour Finals in November.
Nadal has been suffering problems with his left wrist since May when he pulled out of the French Open in the first week. He then tried to accelerate his recovery in an attempt to be fit in time for Rio 2016, where he won a gold medal with Marc Lopez in the doubles.
However, another complication in the same wrist has now forced him to focus on being fit for the start of 2017.
"It is no secret that I arrived to the Olympic Games short of preparation and not fully recovered, but the goal was to compete and win a medal for Spain," Nadal said in a statement Thursday.
"It is no secret that I arrived to the Olympic Games short of preparation and not fully recovered, but the goal was to compete and win a medal for Spain," Nadal said in a statement Thursday.
"This forced recovery has caused me pain since then and now I am forced to stop and start preparing the 2017 season.
"I am very saddened for not being able to play next week in Basel since I have a great memory of the tournament and the final played against Roger Federer last year.
"I won't be able to compete either in Paris-Bercy, where the crowds and the FFT staff has always treated me so well. Now it is time to rest and start preparing intensively the 2017 season."
