The squad had been optimistic heading into the Interlagos event after Russell won there a year ago.
Hopes were also high after promising performances in the United States and Mexico City, with Hamilton challenging Max Verstappen for the lead in the final laps of the former (before being disqualified).
Hamilton was 34 seconds back in seventh and voiced his disdain of the Mercedes W14 in the aftermath of the Sprint.
“Totally baffling, and at the same time, unacceptable for all of us,” said Wolff of Mercedes' performance in Sao Paulo.
“We have a proper structure, we're a solid team, and that didn't look like a solid team.
“Interesting that within three consecutive races, you finish a strong second in two of them, challenging Max, and then a week later, you end up nowhere, and this is just not on.”
Wolff argued that Sprint weekends have been a weakness for Mercedes this weekend but was baffled at the sudden drop in performance on a circuit that has typically favoured the Brackley operation.
“Sprint weekends generally haven't been our strength,” he said when pressed by Speedcafe.
“We're working ourselves out of problems most weekends, but it's not on from being almost quickest to ending up eighth. For me, personally, it's the worst weekend in 13 years.
“Yeah, we ran the car way too high, but that wasn't the main reason for an absolutely off weekend in terms of performance,” he added when asked if car set-up was the root cause.
“There's something fundamentally wrong mechanically. It's not the car being slightly too high by a millimetre or two. That is performance, it's not the explanation for a total off.”
Mercedes has made no secret of its plans to change direction for 2024.
It began the current era of regulations with a unique design but has converged on a more Red Bull-style solution with developments this year.
There are underlying weaknesses however as the package was not optimised for that philosophy.
It's a point that will be addressed next season with a more cohesive overall design.
“This car is generally more about plasters that we put on something that's not right, and it shows that it's so unpredictable,” Wolff explained.
“You can swim either side, and when you're six, seven, eight-tenths off, that is when you just tip over the edge and then nothing goes.
“A lot of change, but this is our route, [it will be a] fundamentally different car next year. Today confirms it is the right thing to do.”