The Everton defender suffered a knock to the head and concussion during a training session in Olomouc on Tuesday.
Such an injury means a standard absence of six days, so he will miss Thursday’s opener with Portugal in Uherske Hradiste and the clash with Sweden in Olomouc on Sunday.
England v Portugal
UEFA European U21 Championship
The Finals
7.45pm (BST), Thursday 18 June 2015
Uherske Hradiste, Czech Republic
Live on BT Sport
"It happened completely out of the blue whilst practising set-plays," revealed head coach Gareth Southgate.
"But we’ve said all along throughout the campaign that you’ve got to be prepared for set-backs and dealing with unexpected events and this is another one.
"We’ve been forced to make changes, but it means we can trust everybody that goes in, everybody is ready to play and that’s the important thing.
"A couple of the other teams have lost players too and what’s been good throughout the tournament is that we’ve used the squad.
"We have competition for places in every area of the field and throughout the competition, we’ve not just relied on picking a first eleven as we’ve tried to make changes each time for this sort of reason.
"You know that when you get to the Finals, anything can happen so we’re ready to deal with that and the group are very strong and it’s a great opportunity for someone else."
It comes as a blow for the Three Lions and the player, with senior-capped Stones being one of the group’s most experienced players.
But Southgate is confident that the 21-year-old will be ready to return for the final group game with Italy next Wednesday.
"John’s welfare is the key thing in all of this," he added.
"He’s bitterly disappointed because he was really excited about coming to the tournament, so to miss the start is a great shame for him and our first thoughts are to lift his spirits as quickly as possible.
"But they’re such a tight-knit group, it gives them even more motivation to try and progress."