Mooy suffered a torn ligament in his right knee during Huddersfield Town's 1-0 loss to Arsenal on December 8 and was ruled out for eight weeks by the Premier League strugglers.
Football Federation Australia (FFA) optimistically named Mooy in their 23-man squad on December 20 but have conceded the midfielder will not be fit following consultation with Huddersfield's medical staff, an independent specialist, and FFA's high performance coordinator – senior physiotherapist, Phil Coles, over the weekend.
Socceroos boss Graham Arnold said: "It is disappointing to lose Aaron for the tournament. However, it was important that we left no stone unturned in exploring every option to get Aaron on the pitch for Australia in the UAE.
"We will remain in close contact with Aaron and Huddersfield Town during his rehabilitation and trust that he will make a successful return to action.
"In making the assessment on the injury we agreed Aaron would need at least another month to return to fitness. In a best-case scenario, this would mean he would not be ready to play until after the quarter-final stage [January 24-25, 2019].
"With so many games in such a short period we felt it would be best to bring in a player that is fully fit and ready to go from the outset."
Mooy's misfortune means opportunity knocks for Austria Vienna's Jeggo.
Arnold added: "James has been performing really well in Austria and is a fantastic character, so we are very happy to have him join the squad.
"Initially James was very unlucky to miss out, but sometimes these things happen in football and we are glad we can provide him with this opportunity.
"James has thrived at club level playing in a defensive midfield role and with three attacking central midfielders already in the squad, we felt we needed someone with James’ attributes to provide some depth in that area."
Australia remain confident Hertha Berlin midfielder Mathew Leckie will be fit despite sustaining an injury at the weekend.