Lippi had wanted the 33-year-old's experience for the world champions' title defence in South Africa and said last week that the in-form centre-back was considering a return.
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"He told me, I think definitively, that he doesn't feel it," Lippi told a news conference at the national team's training camp near Florence ahead of Wednesday's friendly against Cameroon in Monaco.
"I'm sorry. I wanted to give a boost (to the team), but I respect his decision."
Nesta, part of Lippi's 2006 World Cup-winning squad, quit internationals in 2007 because of injuries. He missed last season with a back problem but has been healthy and in fine fettle this term.
Lippi did not say whether he intended to call up Juventus's Brazilian-born striker Amauri, who is expected to receive an Italian passport this week and become eligible for the Azzurri.
"I'll talk about Amauri in a few days because only then will he become Italian," he said of a player who had been expected to feature in his plans before a long wait for the passport and a slide in form.
"He'll be under observation like all the other Italians only when he becomes Italian."
Amauri is injured with a thigh strain and is expected to be sidelined for three to four weeks.
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