"Definitely a tough decision," Chapman said through an interpreter. "It's an honor to be selected to an All-Star Game. Your peers vote for you, the managers, fans and all that. And anytime you have an opportunity like that, you want to participate.
"But at the end of the day, it was the smart decision for me to help me recover and get ready for the second half, one that's going to be very demanding and very exciting."
Chapman, among the AL leaders with 25 saves and a 1.38 ERA, said a week off would be good for him to be fresh for the second half.
"It was the right decision to take at this time, rest and get ready for what we have coming up," Chapman said.
The left-hander is still available Friday night and for the rest of the Yankees' series against the Indians in Cleveland.
Chapman said after pitching Thursday night's ninth inning in the Yankeess' 7-4 win that his ailing knee actually felt good and that the discomfort he has been feeling in recent weeks was about the same as it has been.
ESPN's Coley Harvey contributed to this report.