"Unfortunately I was advised ... that I shouldn't play because I developed some swelling in my knee that they can't get out," Williams told the crowd, according to Xinhua.
The younger Williams sister was hit by a series of ankle and knee injuries during 2005 after winning the Australian Open.
She has not played a tournament since losing in her opening match at the Beijing Open in September, and plans to return at the Open in Melbourne starting on Jan. 16.