The Wigan loose forward has failed to recover from the recurrence of his old calf injury he sustained in the early stages of the first Test in Hull on November 21.
England playmaker Sam Tomkins insists his side will cope with the absence of their talismanic captain.
England will announce a replacement captain on Thursday, which is almost certain to be either St George Illawarra's James Graham or Canberra hooker Josh Hodgson.
Coach Wayne Bennett is set to plug the gap in the pack by giving a debut to either Joe Greenwood, O'Loughlin's Wigan team-mate, or Castleford loose forward Adam Milner.
Tomkins knows all about the importance of O'Loughlin, having played alongside him for club and country for eight of the last 10 years, but insists he is not irreplaceable.
"You can replace him," said Tomkins.
"You won't get exactly the same and whether you get better or worse, I don't know, but Lockers is one of our best players without doubt.
"He's the best player every time he pulls the jersey on for Wigan and when he plays for England you know you're going to get a minimum of eight out of 10, he plays well or really well.
Bennett, whose side lead the three-match series 1-0 following their 18-16 win in Hull, is likely to keep any changes to a minimum as they look for a series-clinching victory.
Tomkins has revealed he missed his own stag do in Hamburg at the weekend after getting the chance to revive his international career.
"I needed to book it two months ago," explained Tomkins, who is leaving Wigan to join Catalans Dragons for 2019.
"I couldn't book it any later because I would be back in training. Pre-season starts the end of November so I couldn't book it any other time.
"It was a win-win because, if I didn't play for England, I'm on my stag do and, if I'm not on my stag do, I'm playing for England.
"The rest of them enjoyed it, they didn't miss me. I think after 10 pints you forget who's round it is."