The five-time grand slam winner and former world number one has failed to rediscover her best form after returning from a doping ban last year and split with coach Sven Groeneveld following a first-round exit at the BNP Paribas Open last week.
The loss in California marked the first time that Sharapova, whose 15-month ban for taking the banned drug meldonium ended last April, had lost three consecutive matches since 2003.
“I am really sorry that I have to withdraw from one of my favourite tournaments with my left forearm injury. I am doing everything possible to return to the tour as soon as possible,” Sharapova said in a statement.
The 30-year-old, who has yet to win a title this year, will be replaced by American Jennifer Brady in the Miami tournament, which is scheduled for March 21 to April 1.
“We were looking forward to seeing her play Wednesday, but unfortunately injuries are part of the game. We hope she recovers quickly and is back on the court soon,” Tournament Director James Blake said.
Top men’s players, including Rafa Nadal, Stan Wawrinka and Dominic Thiem, have also withdrawn due to injuries.
Despite the pull outs, the event still boasts a strong field including world number ones Simona Halep and Roger Federer.