The 53-year-old musician was scheduled to perform during Dick Clark’s New Year’s Rockin’ Eve hosted by Ryan Seacrest in New York.
In a statement to People, he said: “I know it’s disappointing to the millions of fans but my test came back positive for Covid, which means I’ll no longer be able to perform as scheduled at NYRE.
“We were ready and I was really looking forward to ringing in 2022 in my hometown in a special way, but for now I wish everyone a healthy and happy New Year.
“The best is yet to come!”
The hip hop star, whose real name is James Smith, has cancelled his appearance in the show, which is still scheduled to include a performance from Karol G.
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Stars joining the 50th anniversary celebrations from Los Angeles include Avril Lavigne and Travis Barker, Big Boi with Sleepy Brown, French Montana, Macklemore, and pop band OneRepublic.
Daddy Yankee is scheduled to perform from Puerto Rico, while Billy Porter will appear from New Orleans.
Plans to scale back the the Times Square New Year’s Eve celebration were announced last week after a surge in New York’s Covid-19 cases.
Meanwhile, New Year’s Eve parties in England have been given the green light after ministers announced that no new coronavirus restrictions will be imposed before the end of 2021.