The 27-year-old missed the Three Lions' win over Ireland tonight and is now self-isolating following an NHS Test and Trace alert to say he had come into contact with a person prior to the camp who has tested positive.
He returned two negative tests in line with FA and Uefa protocol but, adhering to government guidelines, must now go into quarantine.
Coady, who is hoping to be available for Wolves' next Premier League game against Southampton, said: "I’m absolutely gutted to have to pull out of the current England camp as a result of coming into contact with someone who has tested positive for Covid-19.
"I contracted and recovered from the virus myself back in March, and have tested negative twice in camp, but of course it is important that I abide by the rules set by the government and observe a period of self-isolation.
“It’s so frustrating to have to miss games because of this, but these are the rules that are set out and the most important thing is to make sure my teammates are not put at risk.
“My next priority will be to keep my fitness and hope I can be back and available for selection for the next Wolves fixture.
“For now, I will be supporting the lads from afar and I want to wish them all the very best of luck for the next two games.”
Coady will miss England's Nations League matches against Belgium on Sunday and Iceland on Wednesday.
He is aiming to play for Wolves against Southampton and keep up his consecutive appearance streak in the league, having played 121 games in a row. Phil Parkes is the Wolves record-holder with 127.