Hooper, 30, will fly home from Mendoza after telling his Wallabies team-mates he doesn't have the mindset to play for his country, let alone lead it, in Saturday's test .
"Although this decision was not easy to make, I know it is the right one for me and for the team at this precise moment," said the player with 121 tries, quoted in the statement from Rugby Australia .
"My whole career I have sought to put the team first but I don't feel capable of fulfilling my responsibilities at the moment in my current state of mind."
Prop James Slipper will replace him as captain, while Fraser McReight will replace Hooper as left winger.
The move was described as "courageous" by Australia coach Dave Rennie.
"It's very professional of him (...). He addressed the team today, which took a lot of courage, and let them know he was not well. , and he thought it was best for him and for the team that he went home," Rennie said.
"Everyone respects him for that and we will give him all the support he needs," he added.
According to Rennie, Hooper has been struggling with personal issues for several weeks now and eventually went to talk to the team doctor about it.
"He's been able to bottle things up for the past few weeks and we were definitely not aware of anything."
Rugby Australia chief executive Andy Marinos said Hooper's health was a priority and there would be no pressure on him to return to the pitch.
Australia face Argentina again next week in San Juan before a week's break, followed by two Rugby Championship Tests at home to South Africa.
© 2022 AFP