The group, Daoi og Gagnamagnio, had been scheduled to perform their song ‘10 Years’ on Thursday night.
But a member of the group tested positive for the virus, prompting them to withdraw from performing in the live contest.
Their song will remain in the competition and their rehearsal performance, recorded on the stage on May 13, will be shown during the broadcast.
The rest of the delegation has tested negative for Covid-19.
The team will remain in quarantine and be monitored by the health authorities, Eurovision said.
A statement added: “We wish them all the best and will provide further updates in due course.”
On Tuesday, Ireland’s entry Lesley Roy missed out on qualifying for the final of the competition.
The singer-songwriter had delivered a performance of her song Maps live in Rotterdam as the competition returned for a semi-final following last year’s cancellation.
Norway, Israel, Russia, Azerbaijan, Malta, Lithuania, Cyprus, Sweden, Belgium and Ukraine made it through to Saturday’s final.
UK entry James Newman qualifies automatically for the last round of the competition with his song Embers.
In addition to Ireland and Australia, Croatia, North Macedonia, Romania and Slovenia also missed out on a place in Saturday’s final.
Viewers in the UK were unable to vote in the semi-final, however they will be able to cast their ballots in the second semi-final, which will be shown on BBC Four.
The grand final, which will feature commentary from Graham Norton, will air on BBC One on Saturday night.