Beale was initially named in the side with coach Robbie Deans determined to give Australia's player of the year every chance to prove his fitness.
But the 22-year-old full-back was withdrawn prior to Saturday's captain's run at North Harbour Stadium, in which he was only able to play a limited part.
As a result, Adam Ashley-Cooper will switch to full-back with Anthony Fainga'a to start at outside centre. Rob Horne comes onto the bench.
"It's disappointing but is an outcome we'd catered for through our preparation this week," Deans said.
"We always anticipated it would be unlikely that Kurtley would be ready, but we wanted to give him every opportunity to make it. Unfortunately time has run out.
"It was important for the clarity of the preparation, both for the team and for Kurtley, that we made the decision today."
Beale is confident he will be fit to play next week in what he hopes will be the Wallabies' fourth World Cup final.
But Australia will have to beat the All Blacks at their spiritual home of Eden Park for the first time since 1986.
"It's going to be tough watching it from the sidelines, I can't deny that, but it's about the team, not me," Beale said.
"I'm not far away and will hopefully be ready to go next week. I'm backing the boys to do the job in my absence. Everyone's really excited and looking forward to the game."
The All Blacks have had injury problems of their own, with captain Richie McCaw carrying a foot injury while Aaron Cruden starts at fly-half after Dan Carter and Colin Slade both suffered groin injuries.
"Richie will play out of his skin," said Deans, the New Zealander and former All Blacks assistant coach.
"He's one of those blokes. You've only got to look at the way he returns from injury after a long lay-off. He doesn't work his way back into form and back into the game, he hits the ground running. We're expecting the best from him."
Deans was a member of the New Zealand coaching staff at the 2003 World Cup - but insisted he sees everything now in gold and green, not all black.
"It's often suggested to me that I've got mixed emotions. I'm firmly embedded now," he said.
"There's none of that. I've worked with this group for a long time. You establish connections and particularly when you've suffered together, it galvanises those connections."
Full team: A Ashley-Cooper (Brumbies); J O'Connor (Western Force), A Fainga'a (Queensland Reds), P McCabe (Brumbies), D Ioane (Queensland Reds); Q Cooper (Queensland Reds), W Genia (Queensland Reds); S Kepu, S Moore (Brumbies), B Alexander (Brumbies), D Vickerman, J Horwill (Queensland Reds, captain), R Elsom (Brumbies), D Pocock (Western Force), R Samo (Queensland Reds).
Replacements: T Polota Nau, J Slipper (Queensland Reds), R Simmons (Queensland Reds), B McCalman (Western Force), L Burgess, B Barnes, R Horne.
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