"I am devastated to announce that I will not be competing in Sochi," the American said, reports Xinhua.
"I did everything I possibly could to somehow get strong enough to overcome having no ACL but the reality has sunk in that my knee is just too unstable to compete at this level.
"I'm having surgery soon so that I can be ready for the World Championships at home in Vail next February."
The 29-year-old has 59 World Cup race victories to her credit and is the reigning Olympic downhill champion. She badly injured her knee while competing in a Super-G at the World Championships in February last year.
After reconstructive surgery on the joint and a lengthy layoff, Vonn returned to World Cup competition at Lake Louise, Canada in early December, but she injured the same knee again while training in Colorado in November.
At Lake Louise, Vonn was 40th in the first downhill, 11th in a second downhill and fifth in a super-G.
She then competed in a downhill at Val d'Isere in the French Alps just before Christmas, but failed to finish the race as she skied out.
Vonn said she would compete in just one or two races before the Winter Olympics in the Russian ski resort of Sochi from Feb 7.
Vonn bounced back from a frightful crash in downhill training at the 2006 Olympics that left her with a badly bruised back, competing just days later.
A year later, a badly twisted right knee in slalom training at the Are world championships saw her season brought to a premature end.
Vonn also broke a finger in a crash at the 2010 Olympics in Vancouver, an event she went into carrying a shin injury.
--IANS (Posted on 08-01-2014)