The 32-year-old first felt the hip injury in the 129-run win over the United Arab Emirates two weeks ago when he bowled just three overs, NDTV reported.
The seven-foot one-inch fast bowler played in the crucial victory against South Africa, taking three wickets, before missing Sunday's game against Ireland which Pakistan won to secure their place in the last-eight.
The injury is a major blow to the 1992 champions' chances of defeating four-time winners Australia in the quarter-final at the Adelaide Oval on Friday.
"Irfan was one bowler who was different to all the others in the competition," Misbah told AFP. "It is a huge setback for us but we have to live with it."
Irfan, at seven-feet one inch, the tallest man to play international cricket, took eight wickets in the five matches he played at the World Cup.
His injury is the latest in a series of devastating setbacks suffered by Pakistan who have been stripped of an entire first-choice attack.
"It's difficult because we lost two bowlers to suspension before the World Cup," said Misbah of ace spinner Saeed Ajmal and spinning all-rounder Mohammad Hafeez.
"We also lost two good quality pacemen -- Umar Gul and Junaid Khan -- also to injury. Now just when we have started to perform well this injury hits us badly.
"It's a worrying sign for a captain but we have to find a way to handle this."
Junaid was announced in the 15-man squad for the World Cup but injured his leg at a training camp and was replaced by Rahat Ali.
If Pakistan wins the quarter-final, it's understood that Junaid will be called up as a replacement for Irfan.
Before Irfan was ruled out of the rest of the tournament, former captain Wasim Akram told AFP that the player needed to work on his fitness.
"Irfan is different," said Wasim. "His body stretches more and needs careful handling.
The Pakistan Cricket Board (PCB) earlier confirmed Irfan's injury.
"Irfan underwent an MRI scan on Monday afternoon and the radiologist's report showed a stress injury of the pelvis but was inconclusive," said a PCB release.
Brad Robinson, the Pakistan team's physiotherapist, ordered a more detailed scan, which was carried out Tuesday afternoon, and it reconfirmed a stress fracture in the pelvis.
"This injury rules Irfan out of the World Cup," said Robinson.
