The Wimbledon champion was ahead 2-1 in the deciding set against Serbia's Aleksandra Krunic in the second round of the season-opening Brisbane International when she collapsed after a serve.
The Spaniard could not continue, derailing her Australian Open preparations.
"This wildcard is a very valuable opportunity for me get back on the court and hopefully play a few more matches before the first Grand Slam of the year in Melbourne," said Muguruza.
"The Sydney draw is incredibly strong and there will be no easy matches."
Venus Williams, Petra Kvitova, and Angelique Kerber will also play.
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