Leonard, who has struggled with injuries throughout the latter half of his career, missed the final three games of the Clippers' first-round playoff loss to the Dallas Mavericks due to right knee inflammation.
"Kawhi has been ramping up for the Olympics over the past several weeks and had a few practices in Las Vegas. He felt ready to compete," USA Basketball said in a statement.
"However, he respects that USA Basketball and the Clippers determined it's in his best interest to spend the remainder of the summer preparing for the upcoming season rather than participating in the Olympic Games in Paris."
The two-time National Basketball Association champion averaged 23.7 points, 6.1 rebounds and 3.6 assists in 68 regular season games for the Clippers during the 2023/24 campaign.
It marked the first time that Leonard reached the 60-game mark in a season since the 2018/19 campaign he spent with the Toronto Raptors.
In Paris, where the men's basketball tournament begins on July 27th, the Americans will still have a star-studded roster as they seek a fifth consecutive Olympic gold medal.
Team USA will face Serbia, South Sudan and Puerto Rico in the group stage.
