De Bruyne was taken off in the 73rd minute during Belgium's 2-1 loss to England at Wembley on Sunday, with head coach Roberto Martinez saying that it was only precautionary.
"I would not say that Kevin is injured. He said he felt something," Martinez said.
"It is too early to know what he has, but he did not feel a hundred per cent. It was rather a precautionary change."
But on Monday night, the Royal Belgian Football Association announced through their official channels that De Bruyne would return to his club, as he couldn't be fit enough to feature in the game against Iceland.
The Belgians are aware that the game against Iceland is a must-win clash for them, after their loss to England. They are a point behind the Three Lions in the race to finish in top spot in Group 2 of League A, for a place in the knockout rounds of the competition.
Anderlecht youngster Yari Verschaeren or Brighton's Leandro Trossard could start in place of De Bruyne in Reykjavik on Wednesday night.
De Bruyne adds to Manchester City fitness woes
Manchester City face Arsenal in the Premier League this weekend, and have a host of injury concerns to deal with already. Pep Guardiola's side cannot afford an injury to their star man, with many players in their attack already ruled out or uncertain of their fitness for the Arsenal clash.
Raheem Sterling withdrew from the England squad last week, after he was diagnosed with a thigh injury. City are hopeful, though, that the winger will be fit in time for the Arsenal clash.
Bernardo Silva is just making his way back to fitness, but didn't look at his best in either of Portugal's game so far in the international break.
Sergio Aguero has been ruled out with a knee injury since June, while Gabriel Jesus hasn't played since City's first Premier League clash of the season against Wolverhampton Wanderers.
Oleksandr Zinchenko has a muscle injury, which has meant that he has not been able to play in any of City's games so far this season.
In some positive news for City, Ilkay Gundogan has returned to full training, after completing his period of self-isolation following testing positive for COVID-19.Published 13 Oct 2020, 12:04 IST