The tennis champion unexpectedly called a press conference at 4 pm local time in Melbourne on the opening day of the Australian Open.
In front of news reporters, world No.21 explained that he was not fit enough to play his home slam after discovering a parameniscal cyst growing in his left meniscus.
Physio Will Maher said Kyrgios would undergo arthroscopic knee surgery, but he was hopeful the player could return to the circuit when Indian Wells is staged in March.
It means Kyrgios will not appear on Tuesday evening at the boisterous John Cain Arena against Russian Roman Safiullin, who now faces lucky loser Denis Kudla from the United States.
Kyrgios, who won the men’s doubles title with Thanasi Kokkinakis in 2022, said: “Obviously extremely disappointed. Honestly, I’m just exhausted from everything, and it's pretty brutal.
“One of the most important tournaments of my career. It hasn’t been easy at all.
“This coming around is just bad timing. But that’s life. Injury is a part of the sport.
“I’m devastated obviously. It’s my home tournament. I’ve had some great memories here.
“All I can do now is just look forward, do what I need to do and come back.
Kyrgios’s profile popularity has increased since the first five of 10 episodes of Netflix’s Break Point documentary dropped on the streaming service.
He is now the fourth player involved in the filming to pull out of the Australian Open with a physical issue, following the disappointments experienced by Carlos Alcaraz (abdominal tear), Paula Badosa (thigh) and Ajla Tomljanovic (knee).