The second-ranked player in the world withdrew Tuesday from the tournament as well as the following tournament in Cincinnati, another key U.S. Open prep event.
Nadal suffered the injury to his right wrist in practice Tuesday.
He won last year's Rogers Cup in Montreal.
"I'm extremely disappointed that I am unable to defend my Rogers Cup title this year," Nadal said in a statement released by Tennis Canada. "I was looking forward to coming there and playing again in Toronto as I have always loved to play in Canada and had great results in the past at a very important event."
Nadal is left-handed, but the 28-year-old uses a two-handed backhand. In a statement, he said he would be out for a least two to three weeks.
The Spaniard is also the defending U.S. Open champion, and the injury puts that defence in doubt. His 2013 title at Flushing Meadows is one of 14 Grand Slams, tied with Pete Sampras for second in men's tennis history behind only Roger Federer's 17.
Projected to be the No. 2 seed in Toronto, Nadal was set to be in town for Friday's draw. The tournament begins Monday.
Note to readers: This is a corrected version. A previous version had an incorrect list of players who have withdrawn.