Mr Barilaro was on Friday due to face an inquiry investigating his appointment to a plum trade role in New York City.
But earlier in the morning he withdrew, with the committee saying he had informed them it was because of "mental health reasons".
Mental Health Minister Bronnie Taylor said the constant attention on Mr Barilaro over the controversial appointment had taken a toll on her friend.
"He is not up to attending the inquiry today," she told reporters.
"He has been very open about his struggles with mental health."
A parliamentary committee has been examining how Mr Barilaro got the overseas role, which was created while he was the state's trade minister.
He was appointed to the position despite a senior bureaucrat at the state's investment agency earlier being identified as the preferred candidate.
Mr Barilaro stepped down from the role less than two weeks after his appointment was announced in June.
He told the inquiry during his first appearance on Monday that he did not believe he had done anything wrong, but he regretted ever applying for the job.
"If I knew what I know now, I wouldn't have walked into what was a s***show," he said.
"Because the trauma I have gone through the last six, seven weeks has been significant."
Mr Barilaro retired in October, citing the toll public life had taken on him. On Wednesday he said he was struggling just to get out of bed before the end of his role as deputy premier.
Ms Taylor criticised the three weeks Mr Barilaro had to wait before being able to give his side of the story at the inquiry.
"How would that make you feel and how would you manage that?" she said.
"He has been been very honest and very open."
Committee chair Cate Faehrmann on Thursday said Mr Barilaro had been asked to give further evidence as questions remained about the transparency of the appointment process for his and other trade commissioner roles.
The committee has expanded the inquiry's terms of reference and is investigating the appointment of all the state's trade commissioners.
Labor has pledged to abolish the roles if it wins the March state election.
On Tuesday, text messages between Investment NSW chief executive Amy Brown and other government department secretaries were revealed, showing their reaction to news reports of Mr Barilaro's appointment in June.
"This isn't great," Ms Brown wrote on June 20, sharing a news article flagging the inquiry in which she has appeared on three separate occasions.
Mr Barilaro's appointment is also subject to a Department of Premier and Cabinet review led by former NSW public commissioner Graeme Head.
A draft excerpt of his report prompted Stuart Ayres to resign from cabinet and as deputy Liberal leader.
Another review, led by prominent lawyer and former ICAC inspector Bruce McClintock, will examine whether Mr Ayres breached the ministerial code of conduct.Â
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