The 31-year-old had fallen into an advertising board attempting to stop a boundary and was later advised to stand down after further assessments in Leeds.
Wood joins Stuart Broard, Jofra Archer, Olly Stone and Chris Woakes on England’s long injury list, leaving the side depleted for their third Test.
No replacement has been called up for Wood, with Craig Overton looking to make his first appearance in almost two years and Saqib Mahmood is eyeing a potential Test debut.
A statement from the ECB read: “England seamer Mark Wood has been ruled out of the third Test against India with a jarred right shoulder.
“Wood sustained the injury on the fourth day of the second Test at Lord’s and will not be fit to play at Headingley starting on Wednesday. He will remain with the squad in Leeds and will continue his rehab with the England medical team. The 31-year-old will be assessed at the end of this Test match.”
England squad for third Test
Joe Root (capt), Moeen Ali, James Anderson, Jonathan Bairstow, Rory Burns, Jos Buttler (wk), Sam Curran, Haseeb Hameed, Dan Lawrence, Saqib Mahmood, Dawid Malan, Craig Overton, Ollie Pope, Ollie Robinson, Mark Wood