The 26-year-old has been struggling with a right shoulder problem for more than a month and the Croatian skipped the Brisbane International in the hope of recovering in time for the season's first grand slam beginning in Melbourne on Jan 19.
"I am really disappointed to announce that I had to withdraw from the Australian Open," Cilic said in a statement on his website (www.marin-cilic.net).
"I was advised by doctors to be careful as much as possible to avoid even more serious problems.
"It is improving day by day, but I still don't feel fit enough to be able to compete at the highest level."
(Reporting By Michael Hann in London; editing by Amlan Chakraborty)
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