The Scotland prop suffered a back spasm and was unable to train on Thursday morning.
His place in the starting XV has been taken by Ireland’s Tadhg Furlong.
England prop Kyle Sinckler has been added to the bench.
Fagerson is the second Scotland player to drop out of the team in as many days, following Hamish Watson’s withdrawal due to concussion.
It means there will be two Scots in the starting XV in Edinburgh, Rory Sutherland and Duhan van der Merwe. Ali Price, the Glasgow Warriors scrum-half, is among the replacements.
“It’s a shame for Zander not to be able to run out at Murrayfield as a Lion, but he’s not quite one hundred per cent,” said Warren Gatland, the Lions head coach.
“He’ll get a chance to start in the next two games and stake a claim for a Test spot in South Africa, so it’s not worth the risk.”
Revised Lions team (v Japan, Murrayfield, Saturday, 3pm)
15. Liam Williams (Scarlets, Wales)
14. Josh Adams (Cardiff Rugby, Wales)
13. Robbie Henshaw (Leinster Rugby, Ireland)
12. Bundee Aki (Connacht Rugby, Ireland)
11. Duhan van der Merwe (Edinburgh Rugby, Scotland)
10. Dan Biggar (Northampton Saints, Wales)
9. Conor Murray (Munster Rugby, Ireland)
1. Rory Sutherland (Edinburgh Rugby, Scotland)
2. Ken Owens (Scarlets, Wales)
3. Tadhg Furlong (Leinster Rugby, Ireland)
4. Iain Henderson (Ulster Rugby, Ireland)
5. Alun Wyn Jones, captain (Ospreys, Wales)
6. Tadhg Beirne (Munster Rugby, Ireland)
7. Justin Tipuric (Ospreys, Wales)
8. Jack Conan (Leinster Rugby, Ireland)
16. Jamie George (Saracens, England)
17. Wyn Jones (Scarlets, Wales)
18. Kyle Sinckler (Bristol Bears, England)
19. Courtney Lawes (Northampton Saints, England)
20. Taulupe Faletau (Bath Rugby, Wales)
21. Ali Price (Glasgow Warriors, Scotland)
22. Owen Farrell (Saracens, England)
23. Anthony Watson (Bath Rugby, England)
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