Woods has undergone back surgery three times in the last 19 months.
The world number 12 becomes third former major champion to pull out of summer event.
Grace won by two shots at RBC Heritage in South Carolina on 17 April.
The challenge required a team of four to complete the 500-yard par five hole.
The 28-year-old Englishman took advantage of a shocking back-nine meltdown by Jordan Spieth.
The 28-year-old Englishman stunned the world to claim the coveted green jacket at Augusta.
The Englishman finishes five-under to shock the defending champion at Augusta.
Spieth leads by one entering Sunday's fianl round.
World number two sees lead cut to one shot on blustery second day at Augusta.
The American's love affair with Augusta continued in flawless style as he fired a six-under-par 66.
Spieth finished the opening round six under par, two shots ahead of Danny Lee and Shane Lowry.
IBTimes UK runs through all you need to know ahead of the 80th Masters Tournament in Augusta, Georgia.
Day will begin his sixth Masters as the bookies' choice to win.
Reigning champion Jordan Spieth is joined by Paul Casey and Bryson DeChambeau for Thursday's start.
Day did just enough to clinch his fifth victory in his past 12 starts on the PGA Tour.
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