"I have personal commitments of setting up my business so I have withdrawn from the Sri Lankan Premier league as I don't want to play any more," Akhtar said.
The 35-year-old paceman retired after a high-profile but controversial career in March this year following Pakistan's defeat in the World Cup semifinal against India, who eventually won the title.
Sri Lanka's cricket board is hosting its own Twenty20 tournament, the first edition of which will be played from July 19 to August 4.
Apart from Akhtar, stars including Pakistan's Shahid Afridi, West Indians Chris Gayle and Kieron Pollard, South Africa's Herschelle Gibbs, New Zealand's Daniel Vettori and Ireland's Kevin O'Brien had agreed to play in the league.
Akhtar said he will only return to cricket if a young player needs his help.
"I played the game for well over 14 years so now I don't want to play, but if any youngster needs my help and guidance only then I will step onto the field," said Akhtar.
Akhtar started his career in 1997 and took 178 wickets in 46 Tests, plus 247 wickets in 163 one-day internationals. He also played 15 Twenty20 matches.
But his career was beset with fitness and discipline problems which badly hit his reputation and figures.
