The winger's domestic manager has ruled the youngster out of the summer tournament after he missed the last two months of the Bhoys' season with calf injury
Celtic boss Neil Lennon has told Team GB head coach Stuart Pearce that James Forrest will not be fit enough to compete at the Olympic Games.
The Scottish international was among Pearce's list of contenders but the 20-year-old has failed to recover from a calf injury that saw him miss the last two months of the domestic season.
Forrest, who has five caps for Scotland, has progressed through the Celtic academy, going on to make 50 appearances for the Glaswegian outfit.
Lennon told STV: “James Forrest will not be going because he's been injured. Stuart's aware of that.
"He was in his thoughts but the fact that he's been out for so long probably rules him out."
The winger had previously admitted that he would rather play for Celtic in their Champions League qualifiers, which occur during the Olympics in late July and early August.
And Lennon has also revealed that he is not expecting to lose any of his players for the London Games.
"Certainly not the British players, we've spoken with Stuart [Pearce] on that," Lennon said.
However, midfielder Ki Sung-Yueng is being targeted for the Olympics by South Korea, but is not compelled to attend due to being 23-year-old.
Lennon added: "As regards the rest of the players, we'll speak to the other federations regarding that and hopefully there will be some sort of resolution where they are playing with Celtic when the time comes."