Holland was named in the squad last week despite awaiting the results of scans after he was injured during the recent World Sevens Series tournament in Vancouver. He has been ruled out of action for two months.
Brandon Quinn will replace Holland in the 13-man squad.
"It's obviously hugely disappointing to miss the Commonwealth Games especially one on home soil but I'm still really confident that lads can go all the way and win gold," Holland said in a statement on Wednesday.
"I'll do everything I can now to help the boys so I'm fine with filling up the water bottles or helping carry the bags."
The men's tournament will be held on the final two days of the April 4-15 Games on the Gold Coast, with Australia drawn in Pool B with Samoa, Jamaica and England.
(Reporting by Greg Stutchbury; Editing by Peter Rutherford)
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