
Ferguson felt some pain in his right foot after bowling a spell in the informal warm-up match against Afghanistan in Karachi on Sunday, and an initial medical assessment indicated he would not be fit enough to take part in the entire tournament.
Given the proximity to the start of the Champions Trophy and the short nature of the tournament, the decision was made to send Ferguson home to begin rehabilitation.
Canterbury Kings fast bowler Kyle Jamieson will replace Ferguson in the squad, and will depart for Pakistan on Tuesday night.
Jamieson returned to domestic cricket for the Kings in the Super Smash in December, following a 10-month stint on the sideline rehabilitating a stress fracture in his back.
He played a key role as the Kings reached the grand final, finishing as the competition's joint second leading wicket-taker with 14, including figures of 4-12 against the Central Stags at Hagley Oval.
He featured in Canterbury's Round 8 Ford Trophy match against the Central Stags last week as well as today's round nine win over Northern Districts in Hamilton.
Coach Gary Stead said it was tough news for Ferguson and the team.
"We're really disappointed for Lockie. Lockie is a key part of the bowling group and brings a lot of major tournament experience and we know how much he was looking forward to representing New Zealand at another major event.
"We wish him well for his recovery and hope he is back firing soon."
Stead said Jamieson's unique skill set made him an effective replacement for Ferguson.
"Kyle brings plenty of pace and extra bounce which will suit the conditions here in Pakistan," he said.
"He's shown since returning in the Dream11 Super Smash how effective he can be in the shorter forms of the game, and he's bowled with real pace and energy which is what you're looking for from a pace bowler, especially at a pinnacle event.
"We've been pleased with the progress he's made since returning and we feel his loading over the past few weeks and his successful spells in the recent Ford Trophy match mean he will be good to go if required in the tournament."
ICC Champions Trophy fixtures
Wednesday 19 February, 10pm NZT - Black Caps v Pakistan - National Stadium Karachi
Monday 24 February, 10pm NZT - Bangladesh v Black Caps - Rawalpindi Cricket Stadium
Sunday 2 March, 10pm NZT - Black Caps v India - Dubai International Stadium
Tuesday 4 March, 10pm NZT - 1st Semi-Final - Dubai International Stadium
Wednesday 5 March, 10pm NZT - 2nd Semi-Final - Gaddafi Stadium, Lahore
Sunday 9 March, 10pm NZT - Final - TBC