Seven-time world champion O'Sullivan was set to face America's Ahmed Aly Elsayed at the Belfast tournament on Sunday.
The 47-year-old, who has finished as a runner-up at the event three times, will be replaced by Rory McLeod in the draw.
O'Sullivan's withdrawal is another blow for the tournament's organisers, who will also not be seeing world champion Luca Brecel, Mark Selby, John Higgins and Ali Carter, as well as Thailand's Thepchaiya Un-Nooh.
The quintet had signed up to play in an exhibition in Macau which coincided with the tournament and while it has since been rescheduled for December, they will not feature in Belfast having not registered.
The Northern Ireland Open takes place from October 22nd-29th with home favourite Mark Allen looking to win the title for a third consecutive time.
