"He's out," Woodson said on Tuesday. "... He's just not ready."
When asked if Lin could return if the series reached a seventh game, Woodson said, "I don't think so. ... He wants to play, but again, if he's not ready there's not a whole lot can be done.
"He's just not physically ready to play. I'm sure he'll step up to the plate and say, 'Hey, I'm ready when the time comes.' But right now, he's out."
The Heat lead the Knicks 3-1 in the best-of-seven series.
Lin's return became a more pressing issue for the Knicks Sunday when veteran point guard Baron Davis suffered a severe right knee injury in New York's Game 4 win.
The Knicks are extremely thin at point guard going into Game 5.
Mike Bibby, 33, will start in place of Davis.
The 13-year veteran has played 19.7 minutes per game against the Heat but likely will be needed for at least 30 minutes on Wednesday.
Toney Douglas is expected to back up Bibby. Douglas did not play in the first four games of the series.
Despite the Knicks' patchwork situation at point guard, Woodson remains confident in his team.
"Every time I step out on that floor, I think we can win a basketball game regardless of who's in uniform," said Woodson, who may call on Carmelo Anthony and J.R. Smith to handle the ball in Game 5. "It's kind of been that way since I've taken over. We've been shorthanded pretty much all year. Guys have stepped up and did what they've had to do to help us."
The Knicks also lost rookie guard Iman Shumpert for 6-8 months after he tore his left ACL in Game 1. After that loss to Miami, Lin had expressed hope that he'd be able to return later in the series.
The 23-year-old scrimmaged for the first time last week but complained of soreness in his knee the next day.
He worked out Monday and Tuesday with the hope of returning to the floor for Game 5, but he was not cleared to play by team doctors.
Anthony and Amare Stoudemire both intimated that Lin made the correct decision by sitting out. They said it was more important for Lin, who will be a restricted free agent this summer, to be healthy for next season than rush his way back.
If Lin suffered an injury, it likely would affect his value as a restricted free agent.
"For me, my main thing is his health," said Anthony, who had a "private conversation" with Lin recently. "If he's not 100 percent healthy, 110 percent healthy, then there's no need to come out here. (There's) no telling how many minutes he's going to play coming back ... so I just want to take care of himself right now."
Added Stoudemire: "It's mainly about (Lin) just being ready for an incredible year next year. I want him to be healthy and make sure he understands that health is very important. You don't want to mess around with injuries ... you want to take it easy, make sure you're 100 percent."
Ian Begley is a regular contributor to ESPNNewYork.com.