According to reports, Kane Williamson took a Rapid Antigen Test (RAT) after experiencing minor symptoms on Thursday. He will now undergo mandatory five days of isolation. The rest of the squad tested negative for the coronavirus.
"It's such a shame for Kane to be forced to withdraw on the eve of such an important match," said New Zealand coach Gary Stead. "We're all feeling for him at this time and know how disappointed he will be.
Williamson was also recuperating from a tendon injury in his left elbow. He returned to lead the side in the Lord's Test after missing New Zealand's previous series against Bangladesh and South Africa, and also the second and final Test in India in November, 2021. Latham was filing in as the captain in those matches.
Hamish Rutherford, 33, has been named as Kane Williamson's replacement in the New Zealand squad for the second Test. In Williamson's absence, Tom Latham will lead the Kiwis.
"Hamish was with the Test squad earlier in the tour and has been playing for the Leicestershire Foxes in the Vitality T20 Blast," added Stead.
New Zealand are already without Colin De Grandhomme. The all-rounder had suffered an injury to his right leg and he is expected to be out of action for 10-12 weeks.
Earlier, before the start of the series, three members of the touring party -- Henry Nicholls, Blair Tickner and Shane Jurgensen -- were forced to isolate after testing positive in Brighton.
New Zealand lost the Lord's Test to Ben Stokes & Co. by five wickets. The third and final Test at Headingley, Leeds starts on June 23.
New Zealand won the inaugural ICC World Test Championship, beating India in the final. But the defending champions have struggled so far in the ongoing 2021-23 edition.
They are not seventh in the nine-team championship with 33.33 PCT. England are eighth with 19.23 PCT.