According to the medical team, Dolly has no chance of recovering in time for the continental tournament, which will be staged in Egypt later this month.
“He is completely out of the Afcon. There is no chance that his groin injury will recover in time,” said Bafana's team doctor Thulani Ngwenya in a statement to the press.
Ngwenya added the Magnetic Resonance Imaging (MRI) scan revealed that Dolly aggravated his groin injury last weekend.
Dolly was included in the Cosafa Cup squad to gain match fitness and stand a chance of being included in Bafana's final squad for the Afcon tournament.
However, Stuart Baxter may opt to look elsewhere when he selects his 23-man squad to represent South Africa at the finals.
Meanwhile, Baxter had the chance to run the rule over the majority of his squad on Monday.
He was assisted by Molefi Ntseki and Andre Arendse, while Mark Fish, who has been brought in to liaise with the players and the technical team, was also present.
According to the medical team, all the players will undergo mandatory Pre-Competition Medical Assessment (PCMA) for the Afcon tournament.
The PCMA includes a blood test, an echocardiogram and musculoskeletal examination.
Baxter's Bafana Bafana have been drawn in Group D at the Afcon finals, which kick off on June 21 in Egypt.
South Africa will begin their Afcon campaign against Cote d'Ivoire in Cairo, before meeting Namibia and Morocco as they look to reach the knockout stages.