The Arsenal full-back will depart the squad's pre-tournament camp in New York following Monday's final warm-up match against Uzbekistan, with medical staff concluding he is not fit to take part.
"The 24-year-old defender has not recovered sufficiently from a groin injury to take part in the World Cup in a medically responsible manner," the Dutch Football Association said.
Timber's withdrawal brings an abrupt end to his World Cup hopes after a disrupted and carefully managed recovery period. He had been sidelined since mid-March, missing the closing stages of Arsenal's Premier League title-winning campaign after suffering the injury in a league fixture against Everton.
He made a brief return to action in Arsenal's Champions League final defeat to Paris Saint-Germain, coming on as a second-half substitute in the 66th minute after more than two months out, but did not feature again ahead of the tournament.
Netherlands head coach Ronald Koeman said the decision followed extensive discussions with the player and the national team's medical staff, with it becoming increasingly clear in recent days that he would not recover in time.
"Over the last couple of days, we'd already had the feeling that this would be the decision," Koeman said. "In the end, we sat down with Jurrien late last night and again this morning, and unfortunately we had to make this decision."
Koeman explained that maintaining balance in the squad also influenced the timing of the call, with defensive options limited by Timber's absence.
Despite the disappointment, the Netherlands boss insisted there was no criticism of Arsenal's handling of the player's return to action.
"You can't blame the club, and I don't want to either. It is clear, however, that those minutes didn't help," he said. "If he'd only had to play one more match in the coming period, it might still have been possible. But a major tournament wasn't on the cards."
The Netherlands will open their World Cup campaign against Japan on June 14, before facing Sweden and Tunisia in Group F.
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