Penaud sustained a calf injury in the tournament-opening 34-32 loss to New Zealand.
Penaud scored a national record-extending 41st try inside two minutes of Saturday's game in Christchurch but was replaced at halftime.
His withdrawal from the squad was confirmed by France on Monday, forcing him out of matches against Australia in Brisbane on Saturday and Japan in Tokyo on July 18.
Les Tricolores didn't announce a replacement for Penaud, who returned to the squad after being dropped for the Six Nations.
Ireland will be without prop Jeremy Loughman due to concussion and are waiting for news on the fitness of wing Rob Baloucoune ahead of their second Nations Championship clash against Japan in Newcastle, NSW, on Saturday.
Substitute Loughman had been on the field for only eight minutes when he was injured in the epic 33-31 win over Australia that opened Ireland's campaign in Sydney at the weekend, and must undergo standard return-to-play protocols.
Baloucoune was forced to sit out that game with a hamstring injury.
England have added wing Tom Roebuck to their squad for the Nations Championship clash with Fiji at the Hill Dickinson Stadium in Liverpool on Saturday after fullback George Furbank was ruled out with appendicitis.
Argentina have added three players for Saturday's clash against Wales.
The return of experienced loose forward Marcos Kremer will be a boost after he missed the weekend's defeat to Scotland because of the birth of his child, while lock Efrain Elias and centre Justo Piccardo return to the squad after the completion of the French Top 14 competition.
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