Chosen as one of three over-age players alongside Neymar and goalkeeper Fernando Prass for the world showpiece, the Bayern Munich star has had to pull out of the squad as a recurring thigh injury has not fully healed.
Bayern chairman Karl-Heinz Rummenigge shared the news that the Brazilian will no longer be taking part in the global multi-sporting event, to be staged next month on his home turf.
"I greatly regret this," Rummenigge said.
"We all wanted Douglas to contest the Olympic Games in his home country, but the player's health and fitness takes priority."
Brazil begin their Olympic campaign against South Africa in Brasilia on 4 August.