One of the Premier League's standout players so far for Leicester City, Maddison was called up to the 26-man squad for Qatar but sustained a knee injury just two days after the squad was announced in a match against West Ham.
Southgate revealed the 25-year-old has struggled to regain enough fitness to train with the team since arriving in Qatar and as such will not take the field against Iran at Khalifa International Stadium.
"James [Maddison] hasn’t been able to train since we arrived so he will not be able to make the game tomorrow," Southgate told reporters.
Manchester City defender Kyle Walker sustained a groin injury back in October and entered the England squad with doubts around if he would play, but Southgate was optimistic on how his recovery is progressing despite having to miss the opening match.
"Kyle Walker is a little bit short for this game but is progressing really well,” Southgate said.
"We are ahead of where we thought he might be at this point."
Group B - England v Iran
11:30pm - 2:30am (AEDT) - kick-off at 00.00am
LIVE on SBS and SBS On Demand