The 29-year-old, who was withdrawn at half time in Die Mannschaft's 1-0 victory against USA on Thursday, has pulled a muscle in his leg and will now sit out the match in Belo Horizonte.
"Podolski will be missing in the last 16. He's pulled a muscle. He needs two or three days of rest," manager Joachim Low confirmed in a press conference earlier today.
Defender Jerome Boateng also picked up a knock last time out, but Low confirmed that he will be fit to play a part against Algeria if called upon.