Sam Warburton stayed in Melbourne, after Saturday's defeat against the Wallabies, to undergo a scan on his leg.
The Lions have now confirmed that he suffered a 'significant tear in his left hamstring.'
He will remain with the tour party, but will not play in the final test.
Warburton said: "It is incredibly disappointing to be ruled out of the tour through injury as we head to Sydney for the deciding match.
"I wish the team all the best and hope I can play some part in the build up this week. I am confident that the boys can finish the job off and secure the series win."