Hazlewood's absence follows that of Pat Cummins, who also pulled out injured, while left-arm paceman Mitchell Starc has retired from the shortest format international cricket.
Australia have delayed naming a replacement for Hazlewood, feeling they have enough cover to get through the group stage of the T20 World Cup.
Sean Abbott had travelled with the Australia squad from Pakistan as a reserve so would be an option to come into the group.
"We were hopeful Josh would be back to match fitness by the Super 8 stage but the latest indications he is still some time away and accelerating his program will carry too much risk," Australia selector Tony Dodemaide said.
"We will not be naming a replacement player immediately. We feel we are well covered for the initial games so will make any later decisions based on priority need at the time."
There was better news on the injury front for spinner Adam Zampa, who should fit for Australia's World Cup opener against Ireland on Wednesday after experiencing tightness in his groin.
Nathan Ellis and Tim David (both hamstring) are also reported to be on track for the Irish encounter.
Former India international Ravichandran Ashwin has backed New Zealand to outperform Australia at the 2026 T20 World Cup, despite neither Trans-Tasman rival entering the tournament in ideal form.
The Proteas fell to a 30-run defeat against India in an unofficial clash in Navi Mumbai in what was their final warm-up game ahead of the T20 World Cup that kicks off on Saturday.
India legend MS Dhoni is backing the team to go all the way at the upcoming T20 World Cup, saying the co-hosts have all bases covered in their squad.
Australia fast bowler Pat Cummins admits he "ran out of time" to be fully fit for the T20 World Cup that kicks off on 7 February.
