Hernandez, who turns 24 on June 1, had initially been called up as one of Mexico's three over-age players, but United have now agreed with the Mexican FA he will have the full summer off instead.
United boss Sir Alex Ferguson told the club's website: "His form last season was fantastic. He's found the second year more difficult, but a lot of that is down to not having a summer break for three years and playing every summer for his country.
"Next year he will be fine as we have agreed with the Mexican Football Association that he is going to get the requisite rest he needs to perform in the Premier League."
Hernandez, nicknamed Chicharito, will still be involved in Mexico's two World Cup qualifiers at the start of June.
Hector Gonzalez Inarritu, Mexico's director of the national teams, said that Ferguson has denied permission for Hernandez to participate.
"Alex Ferguson denied Javier Hernandez's participation in the Olympic games," Inarritu told a press conference.
Other United players could also be called up for the Games with Ryan Giggs and Paul Scholes potential over-age players for Team GB, along with Danny Welbeck, Phil Jones and Chris Smalling if they are not in the England squad for Euro 2012.