Williams, who is a five-time winner of the season-ending event, was hoping to be back to full fitness in time for the tournament, having spent more than a month in recovery.
However, the American, who has not been in competitive action since losing in the final four of the US Open at the end of August, has been unable to overcome the shoulder problem.
She will now be resting until the start of the new 2017 season but the multiple Grand Slam winner, who lost her world number one ranking this year, admits missing the competition is a massive blow.
"I am really, really bombed that I won't be able to compete," she said. "It has been a really tough year for me, just dealing with my shoulder injury.
"My doctor insists that I stay at home and heal it every single day so I can have a chance to play next year."
Williams' absence could present British number one Johanna Konta, who currently sits ninth in the standings, with the chance to feature in Singapore.
The Australian-born star will clinch the eighth and final spot as long as neither Spain's Carla Suarez Navarro or Russian Svetlana Kuznetsova, 10th and 11th in the rankings respectively, win the Kremlin Cup.