McGree, who is among Australia's most creative and influential players, hurt his left hamstring in Middlesbrough's 1-0 loss to Hull City in the English Championship playoff final on Saturday.
Key attacker McGree was forced off in the 76th minute at Wembley Stadium after pulling up from a challenge - just three weeks out from Australia's opening group stage match against Turkey.
McGree was distraught and put his face into his hands before coming off and immediately looked unlikely for the World Cup finals.
His absence was confirmed when the 27-year-old was not among the players called into camp on Tuesday ahead of warm-up friendlies against Mexico on May 31 and Switzerland on June 7.
Making things worse is McGree would have already been in camp - then Southampton were punted from the play-off final for spying and Boro took their place in the decider.
McGree famously delivered the assist for Mathew Leckie's winner against Denmark that sent Australia into the round of 16 at the 2022 Qatar World Cup.
He also teed up Aziz Behich to score the decisive goal against Japan in qualifying that secured the Socceroos' place at this World Cup.
McGree's absence leaves Australia short of options at that inverted left-winger role, especially after Craig Goodwin failed to find enough form and game time in the A-League Men after a serious groin injury to make the training camp.
Striker Nicholas D'Agostino and defender Hayden Matthews had already withdrawn through injury.
Veteran striker Mitch Duke, a hero in Qatar, was among eight players cut from the training camp squad in Sarasota, Florida.
Striker Tete Yengi, younger brother of Kusini Yengi, has received his first call-up after top form at Japanese club Machida Zelvia.
Skipper Maty Ryan and star defender Alessandro Circati joined after their domestic seasons finished, with Lucas Herrington, Awer Mabil, Kye Rowles, Paul Okon-Engstler and Kai Trewin also heading into camp.
Duke, Alex Robertson, Daniel Bennie, Raphael Borges Rodrigues, Anthony Caceres, Dylan Leonard, Gianni Stensness and Ante Suto were all released.
Australia's World Cup campaign kicks off in Vancouver on June 14 (AEST), before games against the United States (June 20) and Paraguay (June 26).
The final 26-player squad must be submitted to FIFA by June 1.
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