"The Aussie Open is my favourite slam... it's my 'home' slam ... and it hurts that I will have to miss it this year," Nishikori, 28, said in a statement posted on his website.
"My rehab is going well but I am just not ready 100 percent to come back yet in best-of-five-set matches."
Nishikori was ninth in the world rankings before sustaining a season-ending wrist injury ahead of the Cincinnati Masters last August.
He had been hoping to make his return at the season-opening Brisbane International, where he was runner-up in 2017, but withdrew from that event 11 days ago.
Nishikori became the first Japanese man to reach a grand slam final at the 2014 U.S. Open but did not compete at Flushing Meadows last year because of his injury.
The Australian Open will be played from Jan. 15-28.
(Reporting by Frank Pingue in Toronto; Editing by Ed Osmond/John O'Brien)
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