A second round five-over-par 76, which ended with a carelessly missed nine-inch putt, left Olazabal on six-over-par 148, 16 shots behind the new leader, Greg Turner of New Zealand.
The Augusta champion's card included two double-bogeys on the front nine, one after he hit a drive into trouble on the fourth and another by finding the lake at the short eighth.
"My game is no good, it's as simple as that," said Olazabal, who insisted that tiredness was not the reason for his second missed cut in three weeks. "I was very poor from tee to green, very disappointing after the way I finished last week. My driving wasn't good and my irons very poor."
Ballesteros had a 77 on the first day here and a 68 in the second round could not save him as he missed the cut by three shots on 145. While a poor putting round on Thursday put Ballesteros in trouble, a double-bogey at the short fifth in the second round, when he took two to get out of a plugged lie in a bunker, ended his chance of a revival.
Turner fired a 65 after a 50-minute lightning stoppage with only three holes of his round played. That moved him to 10 under par, a stroke ahead of England's Andrew Sherborne, who compiled a 67 in the morning rain, and the Frenchman Marc Farry, who scored a 63, the best round so far.
South Africa's Retief Goosen and another Frenchman, Jeff Remesy, are joint fourth, a further stroke back.
Turner rattled in a 30-foot putt to take a share of the lead and edged in front with a sixth birdie on his penultimate hole.
Success for the 36-year-old New Zealander has previously often come at the end of the year. His fourth European Tour win came in the 1997 British Masters in September and last September he finished second in the Lancome Trophy to clinch a Presidents Cup wild card.
"It's not really that I play better late in the season," Turner said. "More the fact that everyone else is dying at that time after a long year."
FRENCH OPEN (Bordeaux) Leading second-round scores (GB or Irl unless stated): 132 G Turner (NZ) 67 65; 133 A Sherborne 66 67, M Farry (Fr) 70 63; 134 J Remesy (Fr) 66 68, R Goosen (SA) 69 65; 135 J Robinson 67 68; 136 E Darcy 66 70, J Berendt (Arg) 69 67, A Cabrera (Arg) 70 66; 137 J Singh (Ind) 68 69, R Wessels (SA) 68 69, N O'Hern (Aus) 69 68, S Wakefield 69 68, J McHenry 67 70; 138 E Romero (Arg) 68 70, M Roe 69 69, B May (US) 66 72, S Bennett 67 71, *G Havret (Fr) 70 68, A Hansen (Den) 70 68, R Lee 70 68, C Cevaer (Fr) 68 70, C Watts 71 67, J Coceres (Arg) 69 69, S Delagrange (Fr) 69 69, A Sandywell 68 70.
*Denotes amateurReuse content