Hernandez, who turns 24 on June 1, had initially been called up for the Olympic tournament as one of Mexico's three over-age players and had even been suggested as a possible flag-bearer at the opening ceremony.
However, United have agreed with the Mexican FA he will have the full summer off instead.
United boss Sir Alex Ferguson told the club's website: "His form last season was fantastic.
"He's found the second year more difficult, but a lot of that is down to not having a summer break for three years and playing every summer for his country.
"Next year he will be fine as we have agreed with the Mexican Football Association that he is going to get the requisite rest he needs to perform in the Premier League."
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Hernandez, nicknamed Chicharito, will still be involved in Mexico's two World Cup qualifiers at the start of June.
Hector Gonzalez Inarritu, Mexico's director of the national teams, said that Ferguson has denied permission for Hernandez to participate.
Inarritu told a press conference: "Alex Ferguson denied Javier Hernandez's participation in the Olympic games."
He contrasted that with Carlos Vela, the Arsenal striker who has been on loan at Real Sociedad, who had asked for personal reasons not to be called into any of the national teams.
Ferguson may face other calls for United players' services for the Olympics. Ryan Giggs and Paul Scholes are potential over-age players for Team GB, while Danny Welbeck, Phil Jones and Chris Smalling could be called up if any are not part of the England squad for Euro 2012.