Hamilton had controlled much of the race on Sunday in Abu Dhabi before a late Safety Car handed the initiative to Max Verstappen, who went on to win the race and with it the world drivers' championship.
It proved a crushing outcome for both Hamilton and his Mercedes team, the latter of which did manage to wrap up an eighth consecutive constructors' title.
“Lewis and I are disillusioned at the moment,” Wolff said on Thursday.
“We are not disillusioned with the sport, we love the sport with every bone in our body and we love it because the stopwatch never lies.
“But if we break that fundamental principle of sporting fairness and authenticity of the sport, then suddenly the stopwatch doesn't become relevant anymore because we are exposed to random decision making. That is clear that you may fall out of love.
“And you start to question if all the work you have been putting in, the sweat, tears, and blood can actually be demonstrated in bringing the best performances on track, because it can be taken away randomly.
“We will never overcome the pain and the distress that was caused on Sunday.”
Mercedes lodged two protests immediately after the race in Abu Dhabi, both of which were dismissed.
The squad then submitted its notice of intent to appeal, only to withdraw that on Thursday following an announcement that the FIA would analyse the title-deciding Safety Car incident as part of a broader review of its officiating.
In making the decision to initially protest and then appeal, Wolff revealed Hamilton had input on both.
“Every step on the way it was joint decisions,” the Mercedes team boss said.
“We decided, together with Lewis, to protest, to launch the appeal, and to withdraw the appeal.
“As you can imagine, not only for him but also for us as a team, it was terrible to be confronted with a decision that decided the outcome of the world championship.
“But nobody, neither him or us, wanted to win a world championship in the courtroom.
“On the other side, we were deeply wronged on Sunday and it wasn't just a case of a bad call, it was freestyle reading of the rules and it left Lewis like a sitting duck.”
Mercedes has been largely silent since the conclusion of the Abu Dhabi Grand Prix, with its title-winning W12 absent from an FIA photoshoot celebrating this year's world champions.
Hamilton and Wolff were also both absent from the FIA prize giving ceremony in Paris overnight, where the latter would have collected the trophy for the constructors' championship, while the former's only public appearance has been to collect his knighthood on Wednesday at Windsor Castle.
“I would very much hope that Lewis continues racing, because he's the greatest driver of all time,” Wolff said.
“When you look at it from the point of view of the last four races, he dominated them.
“On Sunday, there wasn't even a doubt who won the race, and that was worthy of winning the world championship.
“So we will be working through the events over the next weeks and months.
“I think as a racer, his heart will say ‘I need to continue' because he's at the peak of his game, but we have to overcome the pain that was caused upon him on Sunday.
“Also, [he'll want to continue] because he is a man with clear values, and [it's] difficult to understand that it happened.”
Mercedes has both Hamilton and George Russell under contract for 2022, the former having inked a two-year extension midway through the season just gone.