The 14-time major champion made the announcement via Twitter.
"Unfortunately due to a neck strain that I’ve had for a few weeks, I'm forced to withdraw from the [Arnold Palmer Invitational]," Woods said.
"I’ve been receiving treatment, but it hasn't improved enough to play."
Woods also expressed hope that the injury would only sideline him for one tournament and that his long history of back injuries was not a factor in him pulling out of Bay Hill.
"My lower back is fine, and I have no long-term concerns, and I hope to be ready for The Players."
The news comes as a shock to the golfing world, with Woods showing no sign of injury when he finished in a tie for 10th at the WGC-Mexico Championship only eight days ago.
1) Unfortunately due to a neck strain that I’ve had for a few weeks, I'm forced to withdraw from the API. I’ve been receiving treatment, but it hasn't improved enough to play. My lower back is fine, and I have no long-term concerns, and I hope to be ready for The Players.— Tiger Woods (@TigerWoods) March 4, 2019
Woods would have been seeking a remarkable ninth title at Arnie's place, and expressed his sadness to miss the event.
"I'd like to send my regrets to the Palmer family and the Orlando fans. Its connection to Arnold makes it one of my favorite tournaments and I'm disappointed to miss it."
The neck strain continues a long line of injuries Woods has contended with over the course of his career, including four surgeries on his back between March 2014 and April 2017.
The 43-year-old's absence from Bay Hill could lead to a reshuffling of his schedule ahead of next month's US Masters.
Beyond next week's Players Championship, Woods may choose to play the following week's Valspar Championship, which was almost the site of his comeback victory last year when he finished second behind Paul Casey.
The last two events on the PGA Tour schedule before the Masters (April 11-14) are the WGC-Match Play and Texas Open which have not been stops for Woods in recent years and the WGC-Match Play appears the only other event be may play before Augusta.
Woods' absence from the WGC-Match Play since 2013 is largely due to injury and world ranking and he historically avoids playing the week before a major, rendering a start in Texas unlikely.
Want video tips delivered straight to your inbox? Subscribe to iseekgolf.com newsletters.