The two-time Masters champion cited a knee injury.
"After a long and difficult training process and having reached the point where I felt satisfied with my progress, I noticed an unexpected and preposterous injury to my right knee cartilage," Ballesteros said.
"To my regret this ailment has made me give up participating in the forthcoming Masters. I shall continue trying and putting my best efforts in recovering as soon as possible to play the Spanish Open."
Ballesteros, whose game has not been competitive, will turn 48 during Masters week. He has not made the cut in the tournament in nine years.