The 31-year-old is supposed to be playing in the exhibition Mubadala World Tennis Championship, where he is scheduled to face either Kevin Anderson or Pablo Carreno Busta on Friday December 29.
Nadal will be replaced by countryman Roberto Bautista Agut.
Nadal, last month, withdrew from the ATP Finals with knee injury after losing his opening match to first-time qualifier David Goffin of Belgium. On the women's side, Serena Williams' return for the Melbourne Grand Slam remains in doubt, Victoria Azarenka pulled out of Auckland and US Open champion Sloane Stephens is out of Brisbane.
"I am happy to feel that I am competitive again and that I have a great level", Nadal told Movistar via Tennis World USA.
Yesterday, Nadal's training partner Joao Sousa had confirmed that the Spanish star had cancelled a five-day training camp at Mallorca due to fitness concerns.
"For this reason, I have sadly announced to the organisers and now to you fans that I won't play this time in Abu Dhabi".
Portuguese journalist Jose Morgado quoted Sousa as saying Nadal "still isn't ready" to practice.
Rumblings earlier this week that Rafael Nadal's knee was still giving him trouble seemed to emanate from a single Tweet containing third-hand information.
However, Nadal looks set to become the third man this week to pull out of the six-player competition: Stan Wawrinka and Milos Raonic have already withdrawn. Tennis veterans, Rafael Nadal and Roger Federer, swept through 2017, claiming two Grand Slams apiece.