Palmer is, however, planning to attend next month's tournament.
Palmer, 86, cited a lingering shoulder injury that has prevented him from swinging a club recently.
"I called the [Augusta National Golf Club and Masters Tournament] chairman, Billy Payne, and informed him that I have resigned from hitting the ceremonial first tee shot," Palmer said Tuesday. "I am going to attend the Champions Dinner and then go home on Thursday, which has been my usual schedule the last few years. I plan to go out to the first tee with the chairman on Thursday morning and watch Jack [Nicklaus] and Gary [Player] sweat it out and hit the shots.
"Am I disappointed by that? Well, sure, but time moves on. I stopped playing in the Masters in 2004, I stopped playing in the Par-3 [Contest] last year, and now it's time to end this part of my Masters career. I would love to go on doing it forever, but I don't have the physical capability to hit the shot the way I would want to hit it. So I'll have to be content to watch."
The four-time Masters champion has hit a Thursday morning drive at Augusta National's first hole for each of the past nine years, joined by Nicklaus in 2010 and Player two years later.
Payne said in a statement,"I spoke with Arnold yesterday and we certainly understand his decision. It makes no difference whether he actually hits a drive. He is a true legend in golf and will be welcomed as usual on the first tee with the other Masters Honorary Starters. It will be a great day."
A competitor in 50 editions of the tournament, Palmer last played the event in 2004.
Nicklaus and Player are still expected to hit ceremonial tee shots before the opening round on April 7.
Injury forces Palmer to skip ceremonial tee shot at Masters
ESPN golf writers Michael Collins and Jason Sobel react to the news that Arnold Palmer will miss the ceremonial tee shot at this year's Masters.