Murray had surgery on his back in September and is still in the recovery process.
"I'm really disappointed not to be playing this year, I love playing in front of my home crowd, it's a great atmosphere," Murray said in a statement. "All the players look forward to competing in London and I'll be doing my best to qualify again for the tournament next year."
Since losing to Stanislas Wawrinka in the U.S. Open quarterfinals, Murray has only played twice, winning a pair of matches for Great Britain in a Davis Cup World Group Playoff.
Murray is 43-8 on the year with four tournament titles, including becoming the first British man to win the Wimbledon Championships since Fred Perry in 1936. Murray also won at the Queen's Club, the Miami Masters and at Brisbane and was the runner-up to Novak Djokovic at the Australian Open.
The ATP World Tour Finals are scheduled for Nov. 4-10 in London. The players with the most rankings points accumulated in the calendar year are invited to the finals. Rafael Nadal, Djokovic, Murray and David Ferrer had secured invitations.