Saunders sat out the preseason after being diagnosed with Hodgkin's lymphoma in June, but he was expected back at some point this season. However, he has been hospitalized since September after experiencing complications following the completion of chemotherapy.
Timberwolves owner Glen Taylor confirmed the news on Friday. Asked about Saunders' return to the bench this season, Taylor said, "Not this year.
"I just think his illness, I mean, it's serious. At this point, if he came back, I still think he'd have a hard time to recover all his energy and all that because he has been in the hospital for a long time."
Sam Mitchell has been coaching the team throughout the preseason in Saunders' absence and Milt Newton is handling the front-office responsibilities. Mitchell has experience as a head coach with the Toronto Raptors.
The 60-year-old Saunders is the winningest coach in franchise history.