The Gates Foundation said the billionaire would not deliver his address to ensure the focus remained on the artificial intelligence gathering's "key priorities".
Only days ago, the foundation had dismissed rumours of his absence and insisted he would attend.
Prime Minister Narendra Modi is scheduled to address the event on Thursday, alongside French President Emmanuel Macron, Google CEO Sundar Pichai, OpenAI CEO Sam Altman and Anthropic CEO Dario Amodei.
Gates's absence, followed by another high-profile cancellation by Nvidia's Jensen Huang, adds to a difficult opening for a summit billed as the first major AI forum in the Global South, where India has sought to position itself as a leading voice in global AI governance.
Gates's cancellation comes after the US Department of Justice released emails in January that included communication between late financier and convicted sex offender Jeffrey Epstein and the Gates Foundation's staff.
The documents indicate Gates and Epstein met repeatedly after Epstein's prison term to discuss expanding Gates' philanthropic efforts. Gates has said the relationship was confined to philanthropy-related discussions and that it was a mistake for him to meet Epstein.
The Gates Foundation, the philanthropic organisation started by Microsoft co-founder Bill Gates and his then-wife in 2000, is one of the world's biggest funders of global health initiatives.
India's first major AI summit has not dominated news headlines for the products on display but for management lapses that have left attendees shocked and angry over what they described as a lack of planning by the Indian government.
The summit exhibition halls were shut to the public on Thursday in a surprise move that led to more anger among attendees.
On Wednesday, Indian university Galgotias was asked to vacate its stall after a staff member presented a commercially available robotic dog made in China as its own creation.
Chaos has gripped the city, with people on social media complaining of traffic snarls as police shut roads to give preference to VIP movement.
On Wednesday, footage on social media showed scores of attendees at the summit walking for miles in central Delhi as roads were shut for traffic, with no availability of taxis and no shuttle services arranged.
