Federer, who turns 32 next Thursday, didn't give a reason for the decision to miss the Rogers Cup Masters tournament, where he won twice (2004, '06) and was runner-up twice (2007, '10).
Federer also withdrew from the tournament last year.
"I am disappointed not to be playing in Montreal next week," Federer said in a statement. "It is a great tournament with amazing fans. I look forward to competing there in the future."
Federer was ousted in a stunning upset in the second round at Wimbledon by Sergiy Stakhovsky, 116th in the rankings at the time. He was beaten in the semifinals in Hamburg, Germany, by No. 114-ranked Federico Delbonis and was ousted in straight sets in the second round at the Swiss Open by No. 55 Daniel Brands.
Federer has won 21 Masters tournaments. Only Rafael Nadal, with 24, has more.