The 33-year-old Chelsea midfielder underwent an MRI in Munich this morning to assess the damage suffered in Saturday's FA Cup final, and the scan showed ligament damage to his right ankle.
Ballack was injured following a heavy challenge from Portsmouth's Kevin-Prince Boateng in the Blues' 1-0 win at Wembley and is expected to be out of action for eight weeks.
"National team captain Michael Ballack is out of the 2010 World Cup in South Africa. This is the result of an MRI on Monday morning in Munich," read a statement from the DFB this morning.
"A tear of the medial collateral ligament of the right ankle was found. The right ankle is immobilised in a plaster. He will have to wear a special shoe for two weeks. After the diagnosis of national team doctor Hans-Wilhelm Muller-Wohlfahrt today, a complete healing of the injury is expected. Ballack's return to training is possible at the earliest in eight weeks."
The news will come as a massive blow to Germany coach Joachim Low. Before the diagnosis was known, he told dfb.de: "When we found out about the injury on Saturday we were all very concerned. We had no accurate picture of what had happened.
"The good news is that nothing is broken. But he has a lot of pain and is restricted in his movement. We need clarity but we obviously hope the injury proves to be nothing serious. Michael is our captain and one of our leading players."