Sevens was to be one of two sports featuring Tahitian athletes in Port Vila, after the French Polynesian government opted to boycott the event and not support the team.
Pacific Games Council CEO Andrew Minogue said they were expecting the team to arrive in Vanuatu on Thursday before being informed they weren't coming at all.
"They're still back home and for a range of reason that we don't quite fully understand, whether it's a funding issue or some sort of pressure on them not to come, the reality, the upshot is that they're not going to be here, so the rugby tournament has been adjusted and will go ahead with 10 teams rather than 11, which was what we were expecting."
The Tahiti Rugby Union is not recognised by the French Polynesian government despite being affiliated to World Rugby.
However Minogue said their withdrawal was a big surprise.
"Their rugby team actually missed the deadline to register for these Games and we sort of excluded them on that basis and then they took an action in our disputes tribunal and won, because they were able to show that they actually tried in good faith to enter the team on time," he said.
"So they had taken the steps that are required, I believe they booked flights, I didn't see any air tickets, but terribly disappointing for the players."
A boxing delegation from Tahiti is still expected to compete in Vanuatu.
Minogue said the athletes will compete under the Pacific Games Council banner.
"We've seen their air tickets, we've seen their itinerary and we have every expectation that they'll come so fingers crossed they'll be here.
"Again, for the boxers - not because we want athletes participating under a PGC flag or any of the politics around all of this." he said.
"It's just for the athletes and we want as many of them here as possible, so it might only be a handful in the finish but for those young men it will be a chance for them to compete."
Photo caption: Vanuatu PM, Charlot Salwai and PGC Chairman, Andrew Minogue