The Fafe event is the traditional non-championship curtain raiser to the Portuguese WRC round, which takes place later this month.
Ogier said he wanted to rest to ensure he was fully fit for the main event.
"Unfortunately I have been laid low by an influenza infection, leading my doctor to insist that I withdraw," said Ogier.
"I would really have liked to participate in this unique event, but my World Rally Championship commitments must take precedence. I hope the fans understand that."
VW will still be represented by two-time Intercontinental Rally Challenge champion Andreas Mikkelsen, competing in the Polo R WRC for the first time ahead of his first WRC event in the team's third car in Portugal.
All the top WRC teams are participating at Fafe. Citroen fields works drivers Dani Sordo and Mikko Hirvonen, while M-Sport Ford is bringing its full line-up of Mads Ostberg, Evgeny Novikov, Thierry Neuville and Nasser Al-Attiyah.
Robert Kubica will also join the WRC pack for the first time at Fafe in his WRC2 spec Citroen DS3 RRC.
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