The group - which also features Ozzy Osbourne, Tony Iommi and Geezer Butler - started working on a new album and preparing for their comeback gigs last year.
However, Ward has backed out of the project as he was unable to agree a contract, which meant he would only play a selection of shows.
''I sincerely regret to inform you that after a final effort to participate in the upcoming Sabbath shows a failure to agree has continued," he stated on his official website.
''It is with a very sad heart that I bring you this news. I have to stand for something, and as painful as it is, I'm doing it.
"This statement is even more painstaking to write, as I was particularly excited to play alongside Tony Iommi after the recent treatments he underwent. I wanted that to become a reality."
He continued: ''I can't prioritise the Sabbath fans making one show more important than the other. All of you are important. It's all the gigs or none at all.
''I hold no malice or resentment towards the other band members. I love them; I'm tolerant of them; I'm frustrated with them, as they may be with me. My fight has never been with them. I'll love them forever. In my opinion, nobody wins this time.''
Black Sabbath will play a homecoming show at Birmingham's O2 Academy on May 19, before headlining this year's Download Festival in the UK between June 8-10.
Watch Black Sabbath perform 'Paranoid' live below: