Nadal says the grueling physical demands of recent weeks, including the French Open, led to his decision to withdraw from the grasscourt event.
The 11-time Grand Slam winner plays fellow Spaniard David Ferrer in Sunday's French Open final, after coming through a ferocious five-set encounter with top-ranked Novak Djokovic in Friday's semi-finals.
Nadal says "after these past months and all the matches I have been able to play my doctors have recommended to rest after Roland Garros."
Nadal's place will be taken by wildcard Mischa Zverev of Germany.
Nadal's withdrawal leaves Roger Federer as the favourite to win his sixth title at the Halle tournament, which begins on Monday.
"It is a pity and unfortunate Rafael cannot come," said Halle tournament director Ralf Weber in a statement.
"But I understand his decision... his health is the top priority."