Kyrgios practised at the Santa Ponsa Country Club on Friday but continues to be hampered by knee problems.
It is a further setback to his chances of playing at Wimbledon where he reached the final last year.
"Super disappointed that I can't compete in Mallorca," the Australian said in a video post.
"I've still got a lot going on with my body at the moment and with Wimbledon just around the corner hopefully I will be able to get healthy for that."
Kyrgios, who also pulled out of the Mallorca grasscourt event last year with an abdominal injury, has played one match all year, losing in the first round in Stuttgart this month.
The maverick nature of his tennis means that should he recover in time for Wimbledon he would still be someone few players would like to face.
