Fabio Cannavaro will be out for a "few months" after tearing ankle ligaments in Italy's first training session in Austria before Euro 2008.
The defender, who would have been captain for the world champions in the tournament that starts on Saturday, will be staying with the squad to offer support.
He is expected to have an operation today following the injury sustained on Monday when he was tackled by team-mate Giorgio Chiellini.
"This was my last European Championship. We are footballers and these things happen," the 34-year-old Cannavaro told a news conference yesterday.
"After two years working on this campaign it seems right for me to stay with my team-mates."
The Real Madrid centre-back said he expected to be out of action for a "few months" but was determined to return at the top with the 2010 World Cup still a target despite his age.
"I will take it as a challenge to return to the same important level. Giorgio is an exceptional lad, these things happen. It is not his mistake," said Cannavaro after limping into the news conference on crutches.
"Definitely after the injury I have the will to return. I hope to give the coach some difficulties for the next two years when he is selecting squads."
Cannavaro hinted he may have considered retiring after the Euros if the injury had not happened but was now looking on the bright side and trying to stay cheerful.
Italy coach Roberto Donadoni told Reuters no decision had been made on the captaincy ahead of their opening Group C game against Netherlands in Berne on June 9.
Goalkeeper Gianluigi Buffon looks the most likely candidate to be given the armband while Cannavaro's place in the 23-strong squad has been filled by Alessandro Gamberini.
Donadoni would not be drawn on who would take Cannavaro's spot in the starting line-up at the back with Marco Materazzi, Andrea Barzagli, Chiellini and Christian Panucci also vying for a starting berth in central defence.
"To lose a player of Cannavaro's quality is tough but I'm confident the person who takes his place will perform very well.
"We had Materazzi for a long time and lost him, then Barzagli played in his place and did well," Donadoni told a news conference.
"It is very important to have Cannavaro here. It is important for the group and for continuity. I'm pleased he will stay with us. This is positive for everyone."
As well as the Dutch, the Italians face Romania and France in a tough Group C.