The Australian, who quit after completing just seven holes Friday at Augusta National, was one-over-par for the day, five-over for the championship and in danger of missing the cut.
The world number 11 had been battling the injury for over a week and needed treatment and painkillers just to start the year's first major.
Day finished tied with compatriot Adam Scott at last year's Masters when he made his first appearance at the tournament, highlighted by a second round 64.
He followed up his powerful showing by finishing outright second at the U.S. Open two months later.
The 24-year-old is the third player to withdraw from this year's Masters because of injury, joining former champion Mark O'Meara and Dustin Johnson.