Lawrence Dallaglio underwent surgery on his ankle in Auckland on Sunday and will spend up to two weeks there before returning home from the Lions tour.
The 32-year-old fractured his right ankle 20 minutes into Saturday's 34-20 win over Bay of Plenty in Rotorua, where he spent the night in hospital.
The injury means he is likely to be on the sidelines for anything between four and six months.
"I'm very disappointed my tour should end in the first game," said Dallaglio.
"I've been around long enough to know that injuries are part of the game and, no matter how difficult it is, you have to be philosophical.
"I have had great support from the Lions medical team and also the doctors here and I now just have to prepare myself mentally for the long process of recovery.
"For me, the tour is over, but for the other players they have a great challenge ahead of them, and they know they have my full support."
Lions boss Sir Clive Woodward described the injury as a "huge blow" and said he was "gutted" for the former England captain.
"I went to see him at midnight," said Woodward. "Clearly he is extremely upset but very philosophical about the whole thing.
"It's a bad injury. Dr Robson put it back in on the pitch. When we were watching it he didn't seem in pain but it was just the shock.
"All the players worked very hard but when I met Lawrence and he told me he was stepping down from England, he said his target for this year was the Lions tour. He did everything right.
"He is a world-class player and clearly we are going to miss him. He is one of our key players."
Ireland forward Simon Easterby, 29, who captains the Llanelli Scarlets, has been called up as a replacement.
Easterby, who has won 42 caps for Ireland, is expected to arrive in New Zealand on Monday after an MRI scan on a neck injury sustained in a trial match.
Easterby said: "Obviously I feel for Lawrence, he was looking so impressive so to go out of the tour this way is a massive disappointment for him.
"But I am relishing the chance to be involved in a Lions tour and cannot wait to get out and join the lads in what will be a challenging tour."