Defending champion Lee Chong Wei of Malaysia earned the other place in Sunday's final when he eliminated two-time former Japan Open winner Peter Gade of Denmark 21-13, 21-16.
Chinese superstar Lin, the sport's biggest name and winner in Tokyo in 2004 and 2005, said the skin on his left foot came off after a tough match against another teammate, Chen Jin, in the quarter-finals yesterday.
"I was disappointed that I could not continue playing, but we have more tournaments for the race for the London Olympics, so I don't want to take a risk now," said Lin, 27.
"This is not the only event that counts towards the Olympics. The race continues until May next year. I''m going to play solidly in each tournament. I promise that I will come back next year in better form."
World number one Lee simply had too much for the 34-year-old Gade.
"Peter is a veteran player. I think it was a bit difficult for him physically. I just played patiently and tried to attack when I had a chance," said Lee.
"I have only one more match to go Sunday. I'll try to do my best and win because this is the 30th anniversary of the Japan Open."
Lee defeated Lin in last year's Tokyo final but has a nasty habit of losing to the Chinese in major championships including the finals at the Beijing Olympics, the world championships and the Asian Games.
"I wanted to play against him (Lin) in the final," Lee said.