Federer, 36, withdrew from the final event of the regular season after battling past Juan Martin del Potro 6-7 (5/7), 6-4, 6-3 to win his eighth Swiss Indoors title in Basel.
Federer, winner of a 95th career title which puts him into second on the all-time list behind the 109 of Jimmy Connors, had said all week that he would make a late decision depending on his post-Basel fitness.
“My body is asking for a break,” said the Swiss legend. “Basel takes a lot out of me emotionally. I had five matches in six days. I feel sorry and sad for Paris.
“I love to play at Bercy, it’s a few times now that I’ve not played there. It’s a tough one but they have to understand that it’s for the cause of staying injury-free and healthy.
“I’d like to be fully fit for London (the World Tour Finals) and for 2018.”
According to ATP calculations, Nadal can clinch the year-end number one status by winning his opening second-round match in Paris.
The Spaniard will open his campaign at Bercy against either German serve-and-volleyer Mischa Zverev or Hyeon Chung, the promising South Korean.
Federer last played Paris in 2015 and won the title in 2011.
“I did think about the ranking, but I’m so far back in the points race that it was almost out of the question,” added Federer.
“I asked myself what I would do if the ranking (issue) was not there. I want to stay injury-free, not push it and maybe get hurt next week and then miss London.
“It would be a snowball. It was not really about the ranking to be quite honest. If I was closer in the points race (to Nadal) it might have been.”
On Sunday, Federer claimed his first success against del Potro in a Basel final, after the South American beat him in both 2012 and 2013.
He now has won a Tour-leading seven titles this season after beating Nadal in the Shanghai Masters final a fortnight ago.
Federer has also captured the Australian Open and Wimbledon titles in 2017.
He admitted frustration after failing to win the opening set on Sunday.
“Being up two breaks should be enough to beat almost anyone. I was also up in the breaker. I had way too many wasted opportuities,” he explained.
“I didn’t have the best serving day, I struggled. It was mental and physical, I’m glad I found a way somehow.”
Del Potro will be playing for a fourth successive week in Paris after coming back earlier in the season from wrist problems, as he looks to snatch a late place for the eight-man event in London.
The 29-year-old reached the Shanghai semi-finals and won in Stockholm earlier this month before his run in Basel.
Federer lost only two sets during the week as he improved his head-to-head record to 17-6 over del Potro, with a third win in four matches against the former US Open champion in 2017.
“It’s unbelievable how well Roger is playing,” said del Potro. “I hope to be in such shape when I’m his age. But I doubt I will be.”
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