The five-time Wimbledon champion has cited health reasons for her decision to drop out of the tournament, which starts in Melbourne next week.
"I regret to announce that I am withdrawing from the Australian Open," said Williams.
"After several months of training and treatment, I am making steady progress to top competitive form. My diet and fitness regimen have allowed me to make great strides in terms of my health.
"I am very close to being ready to return to WTA competition. I have every intention to return to the circuit in February."
Williams has not played competitively since withdrawing from last year's US Open with a rare auto-immune disease.