The three-times NBA champion and four-times league Most Valuable Player won gold medals with Team USA at the 2008 and 2012 Olympics but after six consecutive trips to the NBA Finals James decided he needed rest.
He joined a long list to players to turn down invitations to Rio.
Among the other American NBA players who opted out of consideration are twice reigning NBA MVP Stephen Curry, Russell Westbrook, James Harden, Chris Paul, Anthony Davis, Blake Griffin, John Wall and LaMarcus Aldridge.
While a handful of athletes from other sports have pulled out of the Aug. 5-21 Olympics due to health fears over the Zika virus in Brazil, no NBA player has yet to cite the mosquito-borne virus for his decision.
Zika can cause crippling birth defects and, in adults, has been linked to the neurological disorder Guillain-Barre.
"I think I can speak for the entire coaching staff and say we're extremely excited about the team we will field for the 2016 Olympics in Rio de Janeiro," said Jerry Colangelo, managing director of the USA men's national team.
"I love our depth, which is another indication of the depth of talent our national team programme is blessed with. We've got a great mix of talent, scorers, past gold medal winners and outstanding youth."
Despite the absence of many top players, the U.S. will still head to Rio as heavy gold medal favourites as they go in search of a third consecutive Olympic title.
The U.S. will now be led by former NBA MVP Kevin Durant of the Oklahoma City Thunder and Cavaliers guard Kyrie Irving.
Durant, who collected MVP honours in leading the USA to gold at the 2010 world championship and finished as the U.S. team's leading scorer at the 2012 London Olympics by averaging an American Olympic record 19.5 points a game,
Other members of the team include New York Knicks' Carmelo Anthony, Chicago Bulls' Jimmy Butler, Sacramento Kings DeMarcus Cousins, Indiana Pacers Paul George, Clippers DeAndre Jordan of the Los Angeles Clippers, Toronto Raptors DeMar DeRozan and Kyle Lowry and three members of the Golden State Warriors - Harrison Barnes, Draymond Green and Klay Thompson.
"I'm anxious to get on the court and along with my great coaching staff, get to work," said USA head coach Mike Krzyzewski.
"Looking at this team, our overall balance is what strikes me.
"We have lightning-quick guards who can score as well as distribute the basketball. We have great shooters and explosive scorers, we're big and athletic, and I think we'll really be able to defend."
(Reporting by Steve Keating in Omaha, Editing by Ed Osmond)
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