The 27-year-old, who won gold for Great Britain in the 5,000m and 10,000m at the 2010 European Championships in Barcelona, said he needed a rest.
Farah, who broke the British 5,000m record in August, was due to represent England in both events in the Games which start in Delhi on 3 October.
But he said: “My body is telling me it is time to take a break.”
The Somalian-born athlete has enjoyed his best-ever track season this year, storming to gold ahead of fellow Briton Chris Thompson in the European 10,000m, before adding the 5,000m crown four days later.
In May, Farah set a new British road record for the 10k and last month became the first Briton to run under 13 minutes for the 5,000m when he shattered David Moorcroft’s 28-year-old record at the Diamond League meeting in Zurich.
Farah said: “I had a great 2010 season and my body is telling me that it is time to take a break from training and racing.
“I have been competing since the start of the year at cross-country, road and track and feel that I need a few weeks off now to let my body recover so that I can start winter training fit and healthy.
“Over the past few weeks I have been getting a few niggles, nothing serious but enough to tell me to ease back.
“I was looking forward to the Commonwealth Games in Delhi but after the success I had this year I am happy to call it a season.
“I look forward to the 2011 World Championships in Daegu and the 2012 Olympic Games in my home city of London.
“I came close to getting a medal in the past two World Championships and hope that I can continue to improve over the next few years.”
Meanwhile, 800m world record holder David Rudisha has pulled out of the Kenya team for the Commonwealth Games, saying he needs to rest.
Rudisha broke the 13-year-old world record on two occasions in August.
The 21-year-old ran in one minute 41.01 seconds at a meeting in Italy on 29 August – eight hundredths of a second faster than the record he set in Berlin eight days earlier.
“I believe I need time to rest and focus on next year,” Rudisha told Inside The Games.
“I have come to realise that, in this profession, you do not need to wait for your body to tell you when to stop but rather have the instinct to stop when it is required.”
Rudisha’s season will now end after he represents Africa at this weekend’s IAAF Continental Cup in Split, Croatia.
“Next year has the world championships and then we have the Olympics. I want to be in top form for both events,” he added. – BBC