Two-time champion Nadal was visibly in pain during his gruelling five-set win against American Taylor Fritz on Wednesday and indicated afterwards that he may not be able to continue.
Spanish sports daily Marca reported that Nadal had a “seven-millimetre” tear to his abdomen but still intended to play.
But the 36-year-old scheduled a press conference on Thursday evening at the All England Club at which he confirmed he was pulling out.
Tear in muscle
“Unfortunately, as you can imagine, I am here because I have to pull out from the tournament,” said the 2008 and 2010 winner.
“As everyone saw yesterday I have been suffering with a pain in the abdominal and something was not OK there. That is confirmed, I have a tear in the muscle.”
The second seed struggled throughout his match against 11th seed Fritz, but still managed to conjure a 3-6, 7-5, 3-6, 7-5, 7/6 (10/4) win in four hours and 21 minutes.
The 22-time Grand Slam champion was given pain relief during the contest and had a medical time-out in the second set, admitting his father and sister had been gesticulating for him to quit.
He practised at Wimbledon on Thursday but in his 7.20pm (1820 GMT) press conference he admitted defeat.
The Spaniard, who said he had had an issue with his abdominal muscles for the past week, admitted he had been struggling with what decision to make all day.
Nadal had been still on course to win all four majors in the same year after he won the Australian Open before collecting a 14th French Open crown.
The last man to achieve the feat was Australian Rod Laver, in 1969.
But Nadal said he wanted to put his health first, fearing that playing on would only worsen the injury.
“I never thought about the calendar Slam, I thought about my diary and my happiness,” said Nadal.
“I made my decision because I believe that I can’t win two matches under these circumstances,” he added. “I can’t serve.
“It’s not only that I can’t serve at the right speed, it’s that I can’t do the normal movement to serve.”
Nadal struggled with crippling foot pain at the French Open but was cleared to play at Wimbledon after treatment.
He said he expected the injury to take up to four weeks to heal but that he would be able to practise from the baseline in a week’s time.
Earlier, Jabeur defeated close friend Tatjana Maria in the semi-finals and will play Elena Rybakina in Saturday’s championship match.
The 27-year-old world number two from Tunisia triumphed 6-2, 3-6, 6-1 while Russian-born Rybakina, representing Kazakhstan, knocked out 2019 champion Simona Halep 6-3, 6-3.
“I’m a proud Tunisian woman standing here,” said Jabeur, who was the first Arab player to make a Slam semi-final.
Before Thursday, South Africans Irene Bowder Peacock, at the 1927 French Open, and Renee Schuurman, in the 1959 Australian Open, were the only African women to have reached a Slam singles final, before the Open era.
“I know in Tunisia they are going crazy right now,” said Jabeur.
“I want to see more Arab and African players on the tour. I love the game and I want to share the experience with them.”
Rybakina overpowered Halep, breaking the Romanian four times in a dominant display on Centre Court.
“It was really good -- today I was mentally prepared and did everything I could and it was an amazing match,” said the 23-year-old.
“I think it’s going to be a great match (against Jabeur). She’s a great player, very tricky player. It’s not going to be easy to play against her drop shots and volleys.”
Rybakina switched her nationality to Kazakhstan in 2018 to take advantage of greater financial help.
Russian and Belarusian players were banned from this year’s Wimbledon following the invasion of Ukraine.