IMG, which represents Grace, confirmed to Golf Channel on Friday that Grace will not represent South Africa in Rio de Janeiro in August.
Grace, the 11th-ranked player in the world, joins fellow South Africans Louis Oosthuizen and Charl Schwartzel, who have also opted not to compete. As a result, South Africa's two Olympic bids fall to world No. 59 Jaco Van Zyl and No. 101 Brandon Stone.
Grace's announcement comes just two days after world No. 4 Rory McIlroy withdrew from Olympic consideration, citing concerns about the Zika virus.