Vonn, the reigning Olympic and World Cup downhill skiing champ, will not compete in next month's Winter Olympics, according to a post Tuesday on her official Facebook page.
"I am devastated to announce that I will not be able to compete in Sochi," Vonn's post read.
The news comes 11 months after she hurt her right knee knee at the world championships. The four-time World Cup overall champion underwent reconstructive surgery but aggravated the problem in a crash during training in November.
"I did everything I possibly could to somehow get strong enough to overcome having no ACL (anterior cruciate ligament), but the reality has sunk in that my knee is just too unstable to compete at this level.
"I'm having surgery soon so that I can be ready for the World Championships at home in Vail next February."
Vonn counts the ski resort in the Rocky mountains of Colorado as her home and spent Thanksgiving Day training in Vail.
She went on to make a successful return to racing before Christmas but last month the writing was on the wall when she had to pull out of a World Cup event in Val d'Isere, France.
The American skier, who is dating golfer Tiger Woods, may have resigned herself to watching the Winter Olympics from the sidelines but the Minnesota athlete is still looking for a silver lining.
"On a positive note, this means there will be an additional spot so that one of my teammates can go for gold," she added.
"Thank you all so much for all of the love and support. I will be cheering for all of the Olympians and especially Team USA!"
Bill Marolt, president of the U.S. Ski and Snowboard Association, supported Vonn's decision and said in a statement: "In looking ahead, I have every ounce of confidence that Lindsey will be in the starting gate next World Cup season ready to compete.
"She knows the hard work it takes to get to the top and still has significant goals to achieve in what has been an incredible career.
"While Lindsey won't be in Sochi, we have a strong team that is well prepared to challenge. Now is the time for those athletes to step up towards our best in the world vision."
The Winter Olympics take place in the Russian Black Sea resort of Sochi and begin on February 7.