With Sri Lanka already losing the series and a hectic Test season ahead, the team management decided on resting the veteran spinner.
Herath was injured in the first Test while fielding but recovered sufficiently to play in the second Test.
Herath joins the list of other Sri Lankan players like all-rounder Asela Gunaratne, pacers Suranga Lakmal and Nuwan Pradeep, who have all been ruled out of the series.
In the 39-year-old's absence, left-arm spinner Malinda Pushpakumara will be leading the spin challenge, a role he has been prepared for as and when Herath retires.
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