The 26-year-old announced his decision on Twitter, with the tournament organisers also confirming he would not be in the draw at Flushing Meadows when the tournament begins on August 27.
"I am very sad to announce that I am not ready to play the US Open in NY," Nadal said. "Thanks to my fans for their support and specially, the new yorkers."
The US Open added that they understood his decision and hoped he would return in 2013.
"Rafa has informed us that he will not be ready to compete at the US Open this year and has withdrawn from the tournament," tournament director Dave Brewer said.
"We hope to see him back on the court soon and look forward to his return to New York next year."
The 2010 champion in New York and 11-times Grand Slam winner has suffered from a nagging knee injury since his surprise second-round Wimbledon exit to Lukas Rosol back in June.
He subsequently withdrew from defending his Olympic title in London, before missing the Toronto Masters and this week's tournament in Cincinnati.
Clay specialist Nadal has suffered from knee problems since missing a chunk of the 2009 season, with concerns that an all-action baseline game places extra pressure on his joints, particularly on the harder courts.
Nadal was not one of the favourites for Flushing Meadows - with Roger Federer and Novak Djokovic boasting stronger records in New York and Andy Murray in good form on hard courts - although he would have been expected to at least reach the semi-finals.
The Majorcan did win his seventh French Open title at Roland Garros earlier this season, but has slipped to world number three following the resurgence of Federer.
That spot could be under threat if world number four Murray continues his recent run, which has seen him reach the Wimbledon final and win Olympic gold.