Woods, who was the last of 54 players to make the cut, was limping down the 17th fairway on six-over par through seven holes when play was called off on Saturday due to bad weather.
The American has won the Masters five times, most recently in 2019, but he has struggled since a car crash in 2021 in which he sustained multiple leg injuries that required major surgery.
"I am disappointed to have to WD (withdraw) this morning due to reaggravating my plantar fasciitis," Woods said on Twitter.
"Thank you to the fans and to The Masters who have shown me so much love and support. Good luck to the players today!"
At Augusta, he squeaked inside the cut line to tie Gary Player and Fred Couples (63) for most consecutive times playing the weekend at the Masters (23).
But in unforgiving conditions on a cold Saturday with heavy rain falling, Woods was visibly limping and made back-to-back double bogeys.
The 15-times major champion has made only one competitive appearance this season and said this week that he does not play many tournaments anymore as he is "limited" in what he can do.
Last year, in his second start after the crash, Woods withdrew from the PGA Championship after carding one of his worst rounds at a major tournament - a nine-over 79.
American Brooks Koepka (32) leads Spaniard Jon Rahm (28) by four shots with the third round of the Masters yet to be completed.