Nicklaus, whose family suffered a tragedy earlier this year when one of his grandchildren died in a swimming pool accident, said he was simply no longer competitive enough to tackle the difficult Augusta National course.
"If you're going to play in this championship, you should be competitive," said Nicklaus. "I think I can play a little bit, but I can't play well enough to be playing."
Nicklaus shot a 76 in the second round, which was concluded Saturday, giving him a 9-over 153 total. That was four shots off the cut figure.
"It's great, it's fun to play in the Masters," he said. "But it's certainly no fun to play that way. It's no fun to go out there and hack it around and struggle to figure out some way to break 80. I don't believe I should be out there."
Nicklaus also said he would not serve as an honorary starter for the tournament. With the passing of Gene Sarazen and Sam Snead, there have been no ceremonial starters the last two years.