According to Sky, Kennaugh has missed an important block of training in the lead-up to the Giro and has not sufficiently recovered to take part in the opening Grand Tour of the 2014 season. It's the second big withdrawal from Sky's line-up for the race after Richie Porte was also deemed unfit.
It's a blow for Kennaugh, who started his season strongly with his first stage race win - the Settimana Coppi e Bartali in Italy at the end of March.
"The Giro is one of my favourite races and I would have loved to have ridden it again," said Kennaugh. "A lot of my friends and family were planning on coming over to Ireland for the start, and I was looking forward to racing back in Italy. This bug laid me low though and it was a tough one to shake off."
Sky's head of performance Rod Ellingworth said: “Pete was struggling before Liege-Bastogne-Liege so we told him to take time off until he was fully recovered."
"Although he has since recovered, the time he spent off the bike meant he hasn’t been able to fully recuperate and regain the condition needed to see him through a three-week Grand Tour. Instead, we’ll work with Pete to get him back to full fitness in the weeks to come."
Sutton goes into the Giro having ridden with Chris Froome at the Tour de Romandie, which Froome won overall.
With no overall contender in the race, Sky will be hunting for opportunistic stage wins with Sutton, Edvald Boasson Hagen, Dario Cataldo, Philip Deignan, Bernhard Eisel, Sebastian Henao, Salvatore Puccio, Kanstantsin Siutsou and in-form sprinter Ben Swift.
Sky's Dario Cataldo claims final stage of the race as Peter Kennaugh takes his first stage race victory
Thank you for reading 20 articles this month* Join now for unlimited access
Enjoy your first month for just £1 / $1 / €1
*Read 5 free articles per month without a subscription
Join now for unlimited access
Try first month for just £1 / $1 / €1