Clarke has hinted at possibly returning to top flight cricket this summer in the BBL after walking out on his contract with the Melbourne Stars last year in the wake of his international retirement.
But there was also talk of the 35-year-old potentially suiting up for NSW for their defence of the Matador BBQs One-Day Cup this summer.
Cricket NSW confirmed in May they had spoken to Clarke about a return for the Blues, but the state association has confirmed the prolific right-hander will be not be part of the Blues' plans for 2016-17 in any format.
"Michael has decided against returning to elite cricket with the NSW Blues," a Cricket NSW spokesman told News Corp.
It's reported Clarke, who has not played for NSW since November 2013, would not be able to commit to the four-month Blues pre-season due to his business demands.
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