The 20-year-old forward has withdrawn from Team USA activities "to focus on the upcoming season", according to a report from the New York Times, which cites unidentified league sources.
Bagley was promoted to the senior team in training camp last week and was one of the 17 finalists to make the roster for the tournament, which will run from August 31 to September 15.
Sacramento still has two players left as World Cup roster candidates, with Harrison Barnes and De'Aaron Fox headed to camp this week.
Bagley was on the select team - younger NBA players brought in to compete against national-team candidates - last week in Las Vegas, and earned a promotion to the national team Friday night following USA Basketball's intrasquad scrimmage.
In his rookie season with the Kings, Bagley was selected to the All-Rookie First team and played in 62 games, averaging 14.9 points and 7.6 rebounds per game as Sacramento remained in the playoff hunt for a majority of the season. "We don't have to make the decision now and we want to give everyone a real shot". The duo is part of the now 16 players vying for one of 12 spots on the team that will travel to Australia and then China later this month to take part in the FIBA World Cup.