Thiem has not played since suffering the injury at the Mallorca Open in June and the 28-year-old, who has slipped to 15th in the world rankings, was unable to defend his 2020 US Open crown.
"I was looking forward to making my return to competition at Abu Dhabi but I feel that I am yet not ready to compete at the highest level," Thiem said in a statement.
"It's disappointing to not take part this year but I need to continue my preparation for the upcoming season. I truly hope to return to the Mubadala World Tennis Championship in the future."
With Norway's Casper Ruud also pulling out, Britain's Dan Evans and American Taylor Fritz will take part instead.
Britain's US Open champion Emma Raducanu was forced to pull out of the event on Monday after testing positive for Covid-19.
Organisers said Tunisian Ons Jabeur, who rose to 10th in the women's rankings this year, would take her place.
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