Sainz gave up 10 minutes even before the opening waypoint of Thursday's Jujuy – Tupiza test due to navigation troubles, but was rapidly making up time as the stage went on.
He looked set to take the lead of the rally when he rolled his car shortly before the finish.
“It was in a corner where we arrive at so fast,” Sainz recalled. “Under braking, the car put itself on the site, I touched the inside and I rolled, up and down, and got into a ditch of 10-15 metres.
“Now I have back pains, pain in the lower back muscle.
“It's a shame. Again, we had lost so much time at the start of the stage – we had to recover, and recover, and recover. And when you take so many risks, these things can happen.
Classified more than two hours down on rally leader Cyril Despres after the stage, Sainz has now officially withdrawn from Dakar 2017.
“The car could not continue by itself because we had broken the radiator, the shifter... we pushed the car, put it on the road, trying to get help,” said Sainz before official confirmation of his retirement from the event was made.
“We are already out. I don't think the car can be repaired because it's so damaged, but they're looking at it.
“I, nevertheless, don't know if I can continue. Let's see how my back is because I have a bit of pain.”