In an Instagram Story post, the world No.2 revealed she feels "OK" while isolating after her COVID-19 result, though is "really sad" not to be playing in the tournament this year.
Sabalenka had been due to return to action for the first time since losing at the semi-final stage of the US Open last month.
"Unfortunately, I've tested positive at Indian Wells and won’t be able to compete," the Belarusian posted.
"I've started my isolation and I’ll be staying here until I’m cleared by the doctors and health officials. So far I'm feeling okay but really sad to not be able to play this year."
The absence of Sabalenka is a further blow for the event, considering world No.1 Ash Barty had already pulled out.
Naomi Osaka is another big-name absentee, along with Serena Williams, while the men's edition is minus Novak Djokovic after the five-time champion opted to withdraw.
Emma Raducanu will be involved, however, after the US Open champion accepted a wildcard, while Kim Clijsters has done the same as she prepares to continue her comeback with a first appearance at Indian Wells in a decade.
Andy Murray is a wildcard entrant for the men's tournament, with the main draw beginning on Thursday (AEDT).