Webb's setback leaves head coach Warren Gatland potentially without nine senior players ahead of the opening clash at home to Scotland on February 3rd.
"Rhys Webb has been released from the Wales National Squad due to a knee injury", the WRU said in a statement.
Uncapped Cardiff scrumhalf Tomos Williams has been called into the squad.
Webb has been replaced by uncapped Cardiff scrum-half Tomos Williams but Gatland will be missing a host of experienced names for most, if not all, of the Six Nations.
The news is another devastating blow to Wales' hopes of competing for the Six Nations title, and comes just one day after Gatland claimed that he expects his side to win the championship, despite the growing number of injuries on his hands.
Webb has only earned 31 caps, meaning he will not be able to play for Wales when he makes his move to France.
Wales, who last won the Six Nations in 2013, travel to Twickenham to take on England on February 10 and then meet Ireland in Dublin on February 24.
In addition, the fly-half Rhys Priestland returned to Bath last week for treatment on a hamstring strain while the Scarlets second-row Jake Ball is expected to miss the entire Six Nations tournament following shoulder surgery.