Atlanta's Kyle Korver was selected to replace Wade on the Eastern Conference All-Star team.
"The Heat fans deserve for me to get on the court with the Heat first than be out seven games and then play in the All-Star Game," Wade said after Tuesday's practice in Miami. "I wasn't going to play much either way it goes. The smartest thing to do will be to use this All-Star break and strengthen myself a little more for the second-half push."
On Wednesday, Wade said he will return to action Feb. 20 against the Knicks.
"I look forward to, after the break, coming back for the guys, getting a practice [next] Wednesday and Thursday and getting ready to play Friday, just getting ready to understand the last 30 games, we've got some good some basketball we have to play if we want to play further, in April and May," he told reporters, according to the South Florida Sun-Sentinel.
Wade has been sidelined for two weeks to recover from a right hamstring injury, and the Heat's leading scorer will miss his seventh consecutive game Wednesday against LeBron James and the Cleveland Cavaliers. Wade practiced Tuesday and traveled with the team to Cleveland but said it was too soon to try to test the hamstring against the Cavaliers.
This is the third time this season Wade has been out with a hamstring injury to either leg. He has missed 16 games this season for the struggling Heat, who are 22-29 and fighting to remain in contention for one of the final playoff spots in the Eastern Conference. Wade is averaging 21.4 points and 5.4 assists per game this season but has been unable to stay on the court consistently.
Wade said he met with Heat president Pat Riley earlier this week before a decision was reached on his status for Sunday's All-Star Game at Madison Square Garden.
An 11-time All-Star, Wade was selected as a reserve after being voted a starter by fans for the past seven seasons. He will travel to New York for the weekend to participate in several league functions and for his charitable ventures.
With Wade stepping aside, it opened a spot in the East that was filled by commissioner Adam Silver. Korver is averaging 12.9 points per game and shooting 52.8 percent from 3-point range for the Hawks (43-10), who have the NBA's best record and are sending three All-Stars to New York, in addition to coach Mike Budenholzer.
"We communicated with them earlier," Wade said of informing the league of his intentions. "Coach Riley and I sat down and talked about what was the best thing to do, and I felt this was best. I'd rather have someone who's had a really good year go out there and get their first All-Star appearance. It will be even more special for them."