Ruck-forward Levi Casboult has replaced Kreuzer in the Blues' line-up.
Kreuzer had only been considered an outside chance of recovering in time to play in the ANZ Stadium clash after being kicked in the leg during the Blues' elimination final win over Richmond last Sunday.
Carlton director of development and coaching Rob Wiley said Kreuzer failed a fitness test early on Friday morning.
"He's still a little bit sore in the lower limb," Wiley said.
"Mick (coach Mick Malthouse) has always had the philosophy that you take fit players into finals and that's the way we're going."
The withdrawal is a blow to Carlton's hopes of containing Sydney's formidable ruck duo of Mike Pyke and Shane Mumford.
No.1 ruckman Robbie Warnock will shoulder much of the load for the Blues with some help from Casboult.
"Robbie Warnock's led the ruck wonderfully well in the last three or four weeks so we go in with great belief that he can carry that ruck duties," said Wiley.
Midfielder Brock McLean was a late withdrawal against the Tigers and wasn't named in Carlton's team to take on Sydney, having been unable to kick with his right foot earlier this week.
But Wiley didn't rule out further changes to the lineup, with McLean, David Ellard and Sam Rowe the three emergencies.
"The best 22 players will run down the race on Saturday night," he said.
"We know what Brock's value is to the team and we'll just see what happens at training today."