Woods will be replaced in the four-man field at the Mid Ocean Club by alternate Jim Furyk.
It was a huge blow to the PGA of America, which experienced what the PGA TOURr goes through when the world's No. 1 player and star attraction decides not to play in an event. Woods had never missed the PGA Grand Slam when he was eligible.
'I just want to take some time off,' Woods said at the TOUR Championship.
He will play in the Presidents Cup in two weeks at Royal Montreal, then not show up on the golf course again until his Target World Challenge in December. The 2 1/2 -month break will be the longest of his professional career except for injury.
Woods said his decision was based primarily on his daughter, Sam Alexis, who was born one day after the U.S. Open.
When he finishes the Presidents Cup, Woods will have played seven of the last 11 weeks.
'I haven't spent as much time at home as I would have liked,' he said.
The PGA Grand Slam, to be played Oct. 16-17, will feature Masters champion Zach Johnson, U.S. Open champion Angel Cabrera, British Open champion Padraig Harrington and Furyk, who tied for second at the U.S. Open and had top 15s in the Masters and British Open.
Woods has won the Grand Slam event every time he has played.
'While we are disappointed that the worlds No. 1 player will not be able to join us this year in Bermuda, we certainly understand and respect his decision to be with his family,' PGA president Brian Whitcomb said. 'Tiger has a long and successful history with the PGA Grand Slam of Golf and as a seven-time winner of this event, we are confident that we will see his participation in the future.'
Furyk also played last year as an alternate when Woods won two majors and he won the Grand Slam in 2003, the year he captured his only major at the U.S. Open.
The others will be making their first appearance.