The seven-time world champion said on his Web site that neck pain plaguing him since a February motorcycle accident will keep him from sliding behind the wheel of a Ferrari team car for the Aug. 23 European Grand Prix at Valencia.
Schumacher, 40, was to have replaced Brazilian Felipe Massa, who was hurt in a July 25 crash while qualifying for the Hungarian Grand Prix. The German driver had retired after the 2006 season.
Ferrari says test driver Luca Badoer will join Kimi Raikkonen for the European Grand Prix, the Italian news agency ANSA reported.
''Yesterday (Monday) evening I had to inform Ferrari Chairman Luca (Cordero) di Montezemolo and team principal Stefano Domenicali that, unfortunately, I wouldn't be able to fill in for Felipe,'' Schumacher said in his statement.
Montezemolo expressed disappointment that Schumacher will not be coming back.
''No doubt his return would have been good for Formula 1 and I am sure it would have seen him battling for first place again," he said. "On behalf of Ferrari and all the fans, I wish to thank him for the strong attachment he displayed for the team."