The 31-year-old, a finalist in 2003, has not played a competitive match since pulling out of last of last year's US Open in August after being diagnosed with Sjorgen's Syndrome, an auto-immune disease.
She announced on her website on Monday: "I regret to announce that I am withdrawing from the 2012 Australian Open.
"After several months of training and treatment, I am making steady progress to top competitive form.
"My diet and fitness regimen have allowed me to make great strides in terms of my health and I am very close to being ready to return to WTA competition.
"I have every intention to return to the circuit in February."
Although Williams, who is currently 100th in the rankings, has not played competitively since August, she did play some exhibition matches at the end of last year.