Nadal's readiness for the first Grand Slam of the year had been in doubt after the top-ranked Spaniard pulled out of an exhibition tournament in Abu Dhabi and from Brisbane International to start the 2018 season.
Azarenka hasn't competed anywhere since Wimbledon, where she lost to Simona Halep in the fourth round on July 10.
Serena's withdrawal comes less than 24 hours after fellow former world No.1 Andy Murray withdrew from the men's event with a chronic hip injury.
Muguruza retired from her Brisbane International opener with leg cramps while leading in the third set.
The five-time finalist withdrew from the Australian Open on Thursday, two days after pulling out of a tuneup event in Brisbane before his first match.
Nishikori has been sidelined since August because of his wrist. That kept him out of the U.S. Open, snapping a streak of appearing in 21 consecutive major tournaments.
Nadal had reached the semi-finals in Brisbane early this year before claiming his first grand slam final in two-and-a-half years at the Australian Open.
Nadal is slated to make a comeback at the Mubadala World Tennis Championship in Abu Dhabi, beginning December 29.
The former world number has not played any competition for a long time and is likely to make a comeback in Melbourne for the first time since giving birth to a baby girl in September.
Sania won the 2016 Australian Open women's doubles title with Martina Hingis before announcing their split in August.
Azarenka, who won the Australian Open in 2012 and 2013, has been involved in a custody dispute involving her son Leo, who was born last Dec. 19.
In the past, tennis legends like Boris Becker, Stanislas Wawrinka, Carlos Moya, Marin Cilic and Rafael Nadal have competed in the tournament which has been renamed as Maharashtra Open.
O'Shannessy will join Andre Agassi and recently-retired Radek Stepanek of the Czech Republic in Djokovic's new-look coaching team.
The former world number one is planning to come out of retirement and "give it a real crack" with compatriot Sam Groth in the men's doubles event of the first major of the 2018 season.
The Swiss maestro, who chose to sit out the second half of 2016 in order to recover fully from his knee surgery as well as a back problem, made a stunning return in 2017 to rise No. 2 spot in the ATP Rankings.
In September, Serena had revealed that she had set an 'outrageous' goal for making a comeback at the Australian Open.
Tournament director Craig Tiley is optimistic that she would return for a crack at her seventh Melbourne Park crown.
Nadal, who withdrew from the last tourney of the season, the ATP Tour Finals, due to an injury to his right knee, said that he will resume training and intends "to do what's right to be ready" for the start of the new season.
Wawrinka is also looking for a new coach to work alongside Yannick Fattebert after Magnus Norman decided to retire in October.
The Swiss maestro on Saturday was shocked by Belgium's David Goffin when he came back into the match to turn it in his favour and win 2-6, 6-3, 6-4 at the O2 Arena in London.
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