Manager Robin Ventura said Hector Santiago will take Peavy's spot in the rotation.
Peavy allowed six runs on seven hits over 2 1/3 innings on Tuesday against the Seattle Mariners in a second consecutive subpar outing. He gave up six earned runs over four innings against the Chicago Cubs on Thursday.
Santiago is 1-2 with a 2.96 ERA in five starts this season. His last start came against the Boston Red Sox on May 22 when he allowed two earned runs with nine strikeouts in six innings, but took the loss in a 6-2 defeat.