The 26-year-old Spaniard, who returned to action at the Chile Open last week after a left knee condition had sidelined him for seven months, was down to play both singles and doubles in Sao Paulo.
However, he was already complaining of lingering pains before making his doubles debut alongside Argentine David Nalbandian in a 6-3 3-6 11-9 victory over Spaniards Pablo Andujar and Guillermo Garcia Lopez on Tuesday night.
Just moments before he and Nalbandian were due to play Horacio Zeballos and Oliver Marach on Wednesday, the pair withdrew.
Nadal is still expected to play in the singles tournament and is scheduled to make his first appearance on Thursday night against Brazilian Joao Souza, the world number 140.
If all goes well, the seven-times French Open champion will head to another clay court tournament in Mexico as part of his preparations for the defence of his Roland Garros title in May.