Auckland were set to participate at the 18th edition of FIFA's global tournament, which is due to take place in February in the United Arab Emirates.
Champions League winners Chelsea and Copa Libertadores holders Palmeiras are the headline teams as UEFA and CONMEBOL's respective entries, though FIFA has been forced into a late change with Pirae nominated as the OFC's representative following Auckland's withdrawal.
FIFA announced the decision on Friday in a statement that said the "delayed reopening of the borders in New Zealand due to the ongoing COVID-19 pandemic" as well as the reintroduction of quarantine protocols in the country had forced Auckland to "reluctantly withdraw".
Monterrey, Al Hilal, Al Ahly, as well as UAE champions, Al Jazira, make up the rest of the entrants for the tournament, which Bayern Munich won last season.
The annual tournament featuring the champions of six global confederations was originally scheduled for Japan in 2021, but COVID-19 concerns within the country forced the competition to be moved to the UAE last October.
The New Zealand club had been nominated as the Oceania Football Confederation's (OFC) representative for the tournament in Qatar, which is scheduled to begin on February 1.
However, the quarantine measures in place in New Zealand in relation to the coronavirus pandemic have led Auckland to pull out.
They had been set to face Al-Duhail in the opening game but that contest will now not take place.
A FIFA statement read: "FIFA has today [Friday] been informed by Auckland City FC that, in light of the COVID-19 pandemic and related quarantine measures required by the New Zealand authorities, the club will be unable to participate in the FIFA Club World Cup 2020.
"Despite FIFA's regular exchanges with the club, New Zealand Football and the OFC in recent days, the requirements of the New Zealand authorities in relation to isolation and quarantine go beyond FIFA's remit and, therefore, it was not possible to reach a solution.
"FIFA together with the Qatari authorities, will implement a comprehensive medical and security protocol providing the safeguards required to protect the health and safety of everyone involved in the competition.
"Following the withdrawal of Auckland City, the FIFA Club World Cup 2020 will be contested by Al-Duhail SC, Al Ahly SC, FC Bayern Munich, Ulsan Hyundai FC, Tigres UANL and the winners of the CONMEBOL Libertadores final scheduled for 30 January.
"The first-round match will no longer take place and Al-Duhail SC will begin the competition in the second round. The competition format remains otherwise unchanged.
"The draw to finalise the pairings will take place in Zurich on 19 January at 16:00 CET."
