Coles had only recently returned to rugby after having a season mired by injury, including concussion symptoms that kept him out of action for around four months.
His Wellington Hurricanes team mate Ricky Riccitelli had been drafted into the side as cover, the All Blacks said on their Twitter feed on Sunday.
Coles left the field in the warmup game on Friday, where New Zealand played half a game each against provincial sides Taranaki and Counties Manukau.
Coach Steve Hansen said the 30-year-old had been substituted on Friday as a precaution and would be monitored this week but not considered for the Aug. 19 match against the Wallabies in Sydney.
Codie Taylor is expected to step into the starting role he fulfilled during the recent British and Irish Lions series when Coles was still suffering from concussion.
Outside backs Nehe Milner-Skudder and David Havili, who was brought in when Jordie Barrett was ruled out for the rest of the season due to a shoulder injury, were also released.
The pair were expected to rejoin the squad next week in preparation for the second game against the Wallabies in Dunedin on Aug. 26.
(Reporting by Greg Stutchbury; Editing by John O'Brien)
