The 32-year-old Ecuadorean, who won road race gold at the Tokyo Olympics in 2021, will instead shift his focus to the Tour de France, which begins on July 4 in Barcelona and finishes on July 26 in Paris.
“For me, it's a complete disappointment, because the Giro is a race that I've always had a lot of affection for and looked forward to,” Carapaz said in a team statement.
“Finding myself in this situation is frustrating because you put a lot of desire and time into it, but in the end I have to prioritise my health now and move forward.
"These are things you aren't prepared for. I will make the best of it and move forward. We are at the gates of the Tour."
The Giro d'Italia runs from May 8-31.