In a statement the OSCE said it would be "unable to deliver its mandate under these circumstances" to monitor the 2nd December.
It claims it had repeatedly pressed the Kremlin to approve the monitoring mission, warning it that delays would hamper its chances of doing a proper job on election day.
Urdur Gunnarsdottir, a OSCE spokeswoman, said: "We have tried everything. ... But we sadly now have to conclude that it is not possible."
Russia shrugged off the OSCE decision to boycott the polls. A spokesman for Vladimir Putin, the president, denied that Moscow had obstructed the monitors.
"The Russian Federation is totally complying with its obligations, as part of the OSCE,'' Dmitry Peskov told the Associated Press news agency.
Peskov denied that the absence of foreign observers might question the credibility of the ballot.
"There cannot be the slightest doubts of the legality of the electoral process in Russia ... It's a purely democratic process,'' he said.
Russia was obliged to invite monitors from Democratic Institutions and Human Rights, the OSCE's Warsaw-based office.
The OSCE says after months of waiting for Moscow's invitation, the organisation finally received the formal green light on October 31.
The organisation then battled with the Kremlin over delays in issuing visas for an advance team of 20 monitors and another 50 monitors for the full observer team.
The OSCE complained that the visa process for both groups was taking too long, while Russia argued that the organisation had been slow in submitting the necessary paperwork.
"We have not received a single visa for the 70 observers," the OSCE said.
Critics say the poll is being heavily stage-managed to ensure victory for the ruling United Russia party.
The party's candidate list is headed by Putin, who is not allowed to run in the presidential election next March, but is believed to be looking for ways to retain power.
Garry Kasparov, an opposition politician, said the elections were "a mockery used by the Kremlin as a decoration to cover up the true colours of the regime".
All 56 OSCE member countries, including Russia, agreed in 1990 to invite international observers to monitor their elections.
The organisation has monitored elections in countries including the US, Britain, France and Poland.