Sportal.co.nz 25.Jun.2013Getty Images
In a major blow for the tourists who lead the series 1-0 after their 23-21 win on Saturday, O'Connell will miss the final two Tests with a displaced fracture of the right forearm.
Scans on Sunday revealed the extent of the injury meaning O'Connell, who had fought his way back from two serious injuries just to make the tour, will not play again this series.
With O'Connell, who captained the Lions against South Africa in 2009, out it means coach Warren Gatland has some tough decisions to make ahead of the second Test in Melbourne on Saturday night.
Reserve forward Geoff Parling would be the most obvious choice to come into the side, although Welshman Ian Evans could be used to partner Alun Wyn Jones in the second-row.
Irish prop Tom Court will also join the Lions squad on Monday as cover for Alex Corbisiero, who has a tight calf muscle following Saturday's gripping win in Brisbane.
Court is expected to go straight onto the bench for Tuesday's tour match with the Melbourne Rebels.
In some good news for the Lions, centres Manu Tuilagi (shoulder) and Jamie Roberts (hamstring) are back in contention for the second Test after recovering from their injuries.
Winger Tommy Bowe has also made a quicker than expected recovery from a broken hand suffered against the Queensland Reds just over two weeks ago.