The Blues wing suffered a hamstring injury in his side's Super 14 loss to the Crusaders on Saturday and has been ruled out of the New Zealand Sevens team for the tournament which starts in Melbourne on March 15.
New Zealand Sevens coach Gordon Tietjens said Howlett had an MRI scan on Monday which revealed a slight tear in the hamstring.
"It's estimated that he wouldn't be able to train fully for a period of seven to 10 days," Tietjens said.
"Given the short turnaround to our first game, we had to make a decision.
"It is disappointing for Doug and the team because he was really excited about going to the Games and playing for New Zealand," Tietjens said.
Howlett will be replaced by veteran sevens player Amasio Valence, who missed out on initial selection because of a knee injury.
However, Valence passed a fitness test on Sunday and will get the swansong he wanted in the black jersey before heading to Japan to play rugby.
"Amasio has come through our training sessions extremely well considering he had been hampered by a knee injury," Tietjens said.
"He was part of the wider squad and was aware that if his fitness test results were good and he did well at training, he would be considered for selection in the event of an injury and that's what's happened."
Valence holds the record for the most individual IRB Sevens tournament appearances with 50.
In 2005 he won the Richard Crawshaw Memorial trophy for New Zealand Sevens Player of the Year and was a finalist in the IRB Sevens Player of the Year category.