The Spaniard had been due to compete in next week's Swiss Indoors Basel, where he was beaten by Roger Federer in last year's final, and the season-ending World Tour Finals in November.
Nadal has been suffering problems with his left wrist since May when he pulled out of the French Open in the first week. He then tried to accelerate his recovery in an attempt to be fit in time for Rio 2016, where he won a gold medal with Marc Lopez in the doubles.
However, another complication in the same wrist has now forced him to focus on being fit for the start of 2017.