The Juventus glovesman featured for the full 90 minutes in Friday's 3-1 away win over Armenia, but an abductor injury had kept him out of training since then.
Buffon was initially hopeful that he would shake off the knock in time to start against the Danes, but Italy's medical team has now made the decision that he is not fit enough to participate at San Siro.
The 34-year-old's absence means that Napoli shot stopper Morgan De Sanctis will now get the chance to prove his worth between the sticks.
Italy currently sits top Group B with seven points from three games, while Denmark is the pool's fifth-placed side with two points from as many matches.
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