Spaniard Nadal confirmed on Wednesday that he had pulled out of the tournament with an abdominal injury.
The news means Djokovic, who has won the last two Grand Slams, will replace Nadal as world No. 1 when the rankings are released on Monday.
It will be the first time in two years that Djokovic, 31, will lead the rankings.
Nadal has not played a competitive match in almost two months after withdrawing from the US Open semi-final with a knee injury.
He said: I felt better than I thought I would one week ago but in the last few days I started to feel a bit in my abdominal, especially when I was serving.
I checked with the doctor and the doctor recommended that I did not play.
It has been a tough year for me in terms of injury so I want to avoid drastic things.
I have to think longer term. I want to keep playing tennis for a couple of years, so I have to do the logical thing.
Djokovic will become the first player to be outside the worlds top 20 and climb to the top of the rankings in the same year since Marat Safin in 2000.
Nadal is yet to confirm whether he will be play at the season-ending ATP Finals in London next month.
Meanwhile, Roger Federer progressed to the last-16 in Paris after Milos Raonic pulled out with an elbow injury.