The Honduran international will not be part of the Catrachos trip to South Africa after suffering a bone fracture in his foot this past Thursday in Romania with club SC Vaslui.
According to team doctors, the injury will take up to six weeks to heal, preventing him from playing in the World Cup.
Costly was Honduras leading scorer during World Cup qualifiers as the Central Americans made it back to the big show after a 28-year absence. He was also one of the most consistent performers in tournaments such as the Gold Cup as well.
Costly was looking to make history as his father, Allen Costly, was part of the Spain '82 side that last played in the biggest sporting event on the planet. Head coach Reinaldo Rueda will give out the list of players later on Monday.
Honduras will play Spain, Chile, and Switzerland in World Cup group H.