Gabriel, 23, was given the nod as Andre Jardine named his 18-man party last month, along with the likes of Barcelona legend Dani Alves, Aston Villa midfielder Douglas Luiz and sought-after Sevilla defender Diego Carlos.
But the 23-year-old Arsenal centre-back complained of discomfort in his right knee following the squad’s first training session last month.
Gabriel began physical therapy and was released from all strength exercises but the pain continued and an MRI scan on Monday determined that he was suffering with tendonitis.
The former Lille star has already left Brazil’s training camp in Sao Paulo and will continue his rehabilitation with Arsenal’s medical team when he returns to north London.
Brazil head coach Jardine is expected to call up a replacement for Gabriel over the coming days.
Meanwhile, Everton have granted Richarlison given permission to compete at the Olympics after initially blocking him from competing when Jardine first named his squad.
The 24-year-old forward, who has started both of Brazil’s opening Copa America matches, is said to be desperate to represent his nation at the Games and newly-appointed Toffees boss, Rafa Benitez, has reportedly reversed the club’s decision.
Brazil have been placed in a group with Germany, Ivory Coast and Saudi Arabia in Japan and will be targeting gold medal success, with the final taking place on August 7.
It means Richarlison could miss the start of Everton’s season which begins at home to Southampton just one week later.
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