"It's incredibly tough, but I can't play in the Olympics like this. It's not fair to Sweden, the Canucks, or me," Sedin told the Aftonbladet newspaper.
The veteran centre missed six National Hockey League games with the Vancouver Canucks after hurting his ribs on January 16 against the Phoenix Coyotes.
He played the last two games with Vancouver but failed to score a point.
Sweden head coach Pär Mårts expresses his sympathy for Sedin's predicament, which leave Sweden missing one of its star players
"It's obviously a huge blow for us and I feel for Henrik who now can't join us here in Sochi," he said in a statement.
Before he got injured, Sedin had played 679 straight games for the Canucks, going back to the 2003-04 season. Sedin's twin brother Daniel also plays for Vancouver and will compete for Sweden in the Olympics.
In 52 games this season, Henrik Sedin has 31 assists and 40 points.
Early Friday morning, Sveriges Radio (SR) reported that Washington Capitals forward Marcus Johansson had been tapped to replace Sedin, although the reports had yet to be confirmed.
DON'T MISS: The greatest Swedish winter Olympians ever