The 18-year-old injured her left ankle at the British Championships in March but went on to win four medals in April's European Championships.
She had surgery on the injury on Monday and will now miss October's competition in Montreal, Canada.
"My eyes are now set on getting ready and fit for the Commonwealth Games next year," Downie said.
"I'm very excited to be on the road to recovery and get fit again. A minor setback is a pathway for a major comeback."
British Gymnastics added that it expected Downie to be "fully fit for an important year of competition in 2018".
Downie's elder sister Becky will also miss the Worlds as she continues to recover from an elbow injury.
BBC Sport's David McDaid
Having shown her dominance at European level to take that historic all-around gold in April, gymnastics fans were excited to see if Ellie Downie could carry that on to the world stage.
With international stars such as Simone Biles, Aly Raisman and Aliya Mustafina all missing, the younger Downie sister's chances of taking all-around honours would have been even higher.
Given what she has achieved already, it's easy to forget she only turned 18 last month.
Her coaches often speak of her maturity and willingness to view the bigger picture when it comes to her body and her career.
Sitting out these World Championships will allow her to come back for a full 2018 including the Commonwealth Games and, crucially, next year's World Championships - which are the first qualifying steps towards the Tokyo Olympics in 2020.
The absence of both Downies means a chance for some younger gymnasts to make their mark.
Look out for the likes of Alice Kinsella, Georgia-Mae Fenton, Kelly Simm and Maisie Methuen to take spots alongside more recognisable names such as Amy Tinkler and Claudia Fragapane.
Britain's Ellie Downie will miss the 2017 World Championships as she recovers from ankle surgery.