The 25-year-old Marsh was named in Australia's 16-man squad for the four-test series in India and will hope to recover in time for the tour starting next month.
Marsh has had problems with his right shoulder, which has restricted his bowling ability, and he pulled up sore after Australia's six-wicket loss against Pakistan in Sunday's second one-day international at the Melbourne Cricket Ground (MCG).
"Mitchell has had an ongoing shoulder injury which we have been managing but it is now at a point where he is unable to function at the level required," Physio David Beakley said in a statement. "He now requires a period of rest and rehabilitation in order to return to full fitness."
The CA did not name a replacement for Marsh but added batsman Peter Handscomb to the Australia squad with Chris Lynn ruled out of the third ODI in Perth due to an ongoing neck injury.
Lynn, who also missed Sunday's second ODI at the MCG, will travel to Brisbane to consult with a specialist.
"Following that consultation and seeing how he responds to treatment we will be able to determine whether or not he can take part in the remaining two one-day international matches in Sydney and Adelaide," Beakley said.
Handscomb, 25, has scored two centuries and two fifties in four tests for Australia since making his test debut against South Africa in November.
Fast bowling spearhead Mitchell Starc has also been rested for the Perth match to manage his workload.
"Mitchell has had a very big six months and played a significant amount of cricket," interim chief selector Trevor Hohns added. "We needed to find an opportunity to give him a break and with his schedule in the comings months we believe now is the appropriate time to give him a match off."
The five-match ODI series between Australia and Pakistan is tied at 1-1.
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