The Queensland Rugby Union and Ioane have agreed the 27-year-old should be suspended for the match at Suncorp Stadium following his involvement in an alleged assault at a Melbourne pub.
The QRU released a statement on Monday confirming the action, declaring Ioane's behaviour was not acceptable.
"Discussions between the QRU and Digby were held on Monday morning and all parties have agreed that Digby failed to demonstrate the necessary behaviours expected of a senior player within the the Reds squad," the statement said.
Victorian police are currently investigating an alleged assault that occurred between Ioane's older brother and another patron at a Prahran hotel on Saturday afternoon.
The 55-Test winger has reportedly been questioned about the incident, a day after the Reds beat the Melbourne Rebels 23-13 at AAMI Park.
Reds coach Ewen McKenzie said the decision to axe him for the one match related to the expectations of his behaviour as a senior player and not to the police investigation.
"As an organisation and as a team we're not happy about some of these things that are going on and the headlines ... that goes around with that," McKenzie said.
"We're taking a stand at this point in time that this type of behaviour is not what we're about.
"I've spent a lot of time speaking to Digby this morning about his role and responsibility in the team and he gets that.
"We had a long discussion around where he sits as a role model and out of that discussion we have to send a message.
"This isn't just a message to Digby but to all our players about what we think is acceptable and what isn't.
"It's irrelevant of what's going in terms to the police investigation. It's how we want to be seen in the rugby community."
McKenzie now needs to find two new wingers for this weekend with fellow Wallabies flyer Dom Shipperley sidelined by a back injury.
Ioane was free to train with the Reds on Monday afternoon and will be available to return against the Bulls on Saturday week at Suncorp Stadium.