The fast-bowling Green was diagnosed with a lower back injury during the ODI series in England, fanning speculation about his availability for the India Tests.
Cricket Australia confirmed last week that Green was considering surgery by New Zealand specialists who have previously helped fast bowlers including Shane Bond and James Pattinson overcome back stress fractures.
The alternative would have been to undergo rehabilitation and limit his bowling in the India series.
Green's condition was complex, though, and the decision to undergo surgery was aimed at ensuring he could bowl long term, the team said in a statement on Monday.
"Whilst spine stress fractures are not unusual in pace bowlers, Cam has a unique defect in an adjacent area to the fracture that is believed to be contributing to the injury," the statement said.
"Recovery time is anticipated to be around six months. The decision to proceed to surgery is with Cameron’s long-term future as an all-rounder in mind."
The injury is a major blow to Australia's hopes of beating India in the five-Test series starting on November 22 in Perth.
India have won the last four series between the teams, including the back-to-back tours of Australia in 2018-19 and 2020-21.
Batting shake-up
While selectors have been cautious about over-bowling Green given his history of back stress fractures as a junior and at state level, the all-rounder has 35 wickets at an average of 35.31 and given invaluable support to the team's ageing attack.
His batting has also developed steadily and he scored his second hundred against New Zealand in February with a majestic, unbeaten 174 in Wellington.
Green batted at number four in his last four Tests, with Steve Smith moving up the order to replace retired opener David Warner. The tall all-rounder's absence will mean a shake-up for Australia's batting order.
Selector George Bailey confirmed on Monday that Smith would drop down the order and Australia will have a new opener for India.
"Clearly we’ve got a number four spot and an opening spot to fill," Bailey told reporters.
Among candidates to open the batting is New South Wales' 19-year-old talent Sam Konstas, who scored twin centuries against South Australia last week making him the youngest player to do so in a Sheffield Shield match since Ricky Ponting.
Konstas, despite having only five first class matches under his belt, was picked in the Australia A squad on Monday along with Victoria opener Marcus Harris and Western Australia's Cameron Bancroft.
Australia A will play India A in a pair of four-day matches before the India series, giving Konstas a chance to push for a Test debut ahead of more experienced colleagues.
Harris, who played the last of his 14 Tests nearly three years ago, did his chances of selection no harm with scores of 143 and 52 in the Sheffield Shield match against Tasmania.
