In a statement, Tennis Australia said on Monday that Nishikori had withdrawn from the season-opening major at Melbourne Park and from the ATP Cup, a new international men's team event which starts next week and will be played in Sydney, Perth and Brisbane.
The world No.13, who has not played since a third-round loss to Alex de Minaur at the US Open, required minor elbow surgery in the off-season.
"Unfortunately I have to pull out of the ATP Cup and the Aussie Open," Nishikori said. "Today, together with my team, we have made this decision as I am still not 100 per cent ready (or) healthy to compete at the highest level.
"This decision was not taken lightly as Australia is one of my favourite places to compete.
"Together with my team I will keep working hard to be back on court as soon as possible. Thanks for all the support."
Nishikori, who peaked at world No.4 in 2015, is a four-time Australian Open quarterfinalist (2012, 2015, 2016, 2019) with a 29-7 record at Melbourne Park.
Earlier on Sunday, three-time champion Andy Murray had said that he had experienced a "setback" in his recovery from pelvic injury and as a precaution would not be participating in the Australian Open beginning January 20.
The Australian Open was going to be Murray's Grand Slam return from a hip injury that almost led him to finish his career at the 2019 Australian Open. Following successful surgery, he returned to tour and won Antwerp before this new setback.
The tournament will see players competing for a record AUD 71 million ($ 49.1 million).
The men's and women's singles champions will pocket $4.1 million each after officials announced an increase of 13.6 per cent on last year's purse. Prize money has more than doubled (183.9 per cent increase) from A$25 million in 2011 (10 years).
Those who lose in the first round of qualifying will take home A$20,000, up 33 per cent, while players losing in the first round of the main draw will earn A$90,000 in prize money.
( With inputs from IANS )