Williams said she wasn’t feeling well and consulted a doctor on Sunday.
She was diagnosed with a viral illness and said she was “extremely disappointed” she won’t be able to play in Toronto.
Qualifier Zhang Shuai of China steps into Williams’ first-round match Tuesday against former world number one Ana Ivanovic of Serbia.
Lourdes Dominguez Lino got the extra berth in the draw.
The strong Rogers Cup field still includes Williams’ sister, Serena, and world number one Caroline Wozniacki, No. 2 Kim Clijsters and No. 5 Maria Sharapova.
Serena Williams, who missed 11 months with a string of health problems, returned in June and won the WTA title in Stanford in late July.
Venus Williams, ranked 34th in the world, has had a disappointing season hampered by hip and abdominal injuries.
“I was really excited to play Toronto,” Venus Williams said in a statement. “I came here ready to go and was practicing. I wasn’t feeling very well and had to see the doctor today.
“I was diagnosed with a viral illness and unfortunately am unable to play. I am extremely disappointed. I’m very sorry to the fans and tournament.”
The talent-laden Toronto tournament is a tuneup for the final Grand Slam of the year, the US Open that starts on August 29 in New York.