Cabinet members made the decision on Thursday shortly after legal advisers recommended that Israel stay away from the proceedings set to begin on 23 February in The Hague.
Ignoring the ICJ was made a little easier after countries such as the United States, Germany and Britain questioned the court's right to adjudicate on the barrier's legality.
However the World Court was asked to rule on the barrier's legality after an overwhelming vote at the United Nations General Assembly in early December – though any findings are non-binding.
"The ministerial team, headed by ... Sharon, decided to make do with the affidavit Israel filed on 1 January - stating that the court does not have the authority to hold hearings on the fence", a ministerial statement said.
The legal team urged Israel not to turn up at because that would lend legitimacy to a case they say is politically motivated and outside the tribunal's jurisdiction.
The International Court of Justice agreed to hold hearings in response to a request by the United Nations General Assembly for a non-binding opinion on whether Israel is legally obliged to tear down the barrier.
"They anticipated their failure to convince the world about what they have to say, and for this reason they decided to boycott"
Palestinian local authorities minister
Israel says it is a security fence to keep out Palestinian attackers.
Palestinians object to the planned route of the barrier, dubbed the Apartheid Wall, due to cut deep into the West Bank with a network of metal fences, razor wire and concrete wall.
The Palestinian local authorities minister, Jamal Shubaki, said the boycott decision shows Tel Aviv's bid to defend the project has failed.
"They anticipated their failure to convince the world about what they have to say, and for this reason they decided to boycott."
"From the start, Israel contested the competence of the International Court of Justice by saying the wall was a political issue and today's decision reflects the failure of this argument," he added.