It comes as a slew of Australians, including the highest-paid player in tournament history Mitchell Starc, were overlooked for new deals with their IPL franchises.
Green, who recently underwent surgery on a stress fracture detected during Australia's white-ball tour of the UK, will miss the home Test series against India and the tour of Sri Lanka that begins in late January.
The allrounder is not expected to be back playing until April at the earliest and it will take longer for him to resume bowling.
While dates for the next IPL have not yet been confirmed, the tournament is expected to run between March and May.
Once the highest-paid Australian in the IPL, Green had appeared a chance to play in the tournament as a specialist batter when he booked in for surgery last month.
Royal Challengers Bengaluru were keen on retaining the 25-year-old despite dropping him during the 2024 tournament, where he earned a $3.15m contract.
But the franchise confirmed overnight Thursday that Green would not be available for next year's tournament.
"There was one other player we certainly would've retained, that's Cameron Green. But unfortunately he's out of IPL due to injury," said RCB director of cricket Mo Bobat.
Big-hitting Travis Head and Test captain Pat Cummins were the only Australians retained by their franchises, remaining at Sunrisers Hyderabad on contracts respectively worth $2.5m and $3.18m.
Head was the fourth-top run-scorer in the tournament's 2024 edition, when Cummins took 18 wickets in 16 matches at 31.44 for runners-up Sunrisers.
With franchises able to retain a maximum of five incumbent players, the remaining Australians who played IPL in 2024 will need to go to auction to remain in the league.
Starc, Glenn Maxwell, David Warner, Marcus Stoinis, Mitch Marsh and Tim David were among the Australian international mainstays who missed out on extensions to contracts worth more than $1m in 2024.
Starc's omission is particularly glaring after the explosive left-arm quick became the highest-paid player in tournament history, signing a $4.42m contract with Kolkata Knight Riders for 2024.
������ 🤌�— Star Sports (@StarSportsIndia) #MitchellStarc and Kolkata are off to a dream start �📹 | @IPL📺 | #KKRvSRH: LIVE NOW on Star Sports | #IPLOnStar | #IPLFinalOnStarpic.twitter.com/oOPFpghd0AMay 26, 2024
The 34-year-old starred in the final to help Kolkata win the title but struggled for consistency playing IPL for the first time since 2015, finishing the tournament as his side's equal-fourth most prolific wicket-taker.
The IPL auction is expect to go ahead in either late November or early December.
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