Nadal was set to face Filip Krajinovic of Serbia for the first time in the last-four clash of the men's singles event.
"I have to pull out. Of course it's a very tough decision for me, especially here in Paris, which has been the most important city in my career without a doubt," Nadal was quoted, as saying by the Guardian.
Nadal, who has never earned a Paris Masters title, said, "It's a tough situation but I tried my best. I did one treatment yesterday night to try and play today."
With the injury, doubts arouse over the Spaniard's participation in ATP World Tour Finals in London this month.
But Nadal, not focusing on the upcoming tournament, rather wished to play long term after treating his injury well.
"It's not about London, it's about the longer term," he emphasised.
The 31-year-old added, "It's important to play tennis as long as possible. The knee is always bothering me a little bit but sometimes it's worse."
Nadal recently became the oldest man to secure the year-end number one spot in the ATP rankings for the fourth time. (ANI)