Victoria Azarenka was due to play Williams in a rematch of last year's thrilling US Open final, which Williams won 7-5 in the third set.
However, after undergoing a medical procedure on her toe on Thursday, Azarenka decided she could not take to the court for her clash with Williams.
"It's been there for the last 10 days and it's been getting worse," the world number one said. "I had to take action, which I did yesterday, and I didn't have enough time to recover."
Azarenka said the toe became infected after a pedicure and said she had tried taping it and playing through the pain.
But after it failed to improve she decided to undergo medical treatment.
"It's just something that I had to do to make sure that I can be fully recovered and ready for the Australian Open," she said.
"It's a compromise I had to make.
"It's just very unfortunate timing, because I was really looking forward to playing. But I'm also quite happy I had two matches here already, which was kind of the point, to come here and get some matches."
Williams will now play either Russian Anastasia Pavlyuchenkova or Ukraine's Lesia Tsurenko in the final.
Azarenka's withdrawal is the second high profile casualty to hit the Brisbane tournament after second seed Maria Sharapova pulled out with a collarbone injury before her first match.