The 43-year-old South African made an early exit after carding a 70 for a two-under total of 142.
Former British Open champions Darren Clarke and Padraig Harrington and Scottish Open title holder Jeev Milkha Singh of India also missed the cut on 141.
Scot Chris Doak, who has had only one top-10 finish on the European Tour, hit a second successive six-under 66 to take the halfway lead in his local event.
World number eight Phil Mickelson was four strokes off the pace after returning a 70 for 136.
Els sounded almost relieved to leave the Castle Stuart links course.
"I thought I played quite well today but I had no idea on these greens so I am glad I am leaving to get on some other greens," he told the BBC.
"I did not get the run of the course - it felt like it was against me - but I am playing nicely and gave myself a lot of opportunities. It's not the first cut I've missed and it won't be the last."
The 35-year-old Doak was one stroke ahead of American Peter Uihlein (66), Dane Joachim Hansen (65) and British pair Ross Fisher (65) and Matthew Southgate (64).
"It's absolutely phenomenal to shoot 66-66 in the first two days," said the Scot. "You start the week thinking you want to go low but to actually do it is fantastic."
Doak, who lost his card at the end of his only previous season on the tour in 2009 and regained it by finishing 10th on the second-tier circuit last year, recorded five birdies, a bogey and an eagle at the long 12th to finish on 12 under.
He paid tribute to 81-year-old coach Bob Torrance, father of former Ryder Cup captain Sam, and to the home supporters.
"It helps Bob being here," Doak said. "He's not at many tournaments now so it definitely helps, makes a difference.
"It's fantastic to hear all the highland accents up here cheering you on." (Writing by Clare Fallon; editing by Tony Jimenez)