The Marseille goalkeeper will not travel to Brazil, having cracked a vertebra while playing against Guingamp in Ligue 1 on Saturday.
Mandanda collided with opponent Mustapha Yatabare and was subsequently withdrawn before being ruled out of Deschamps' plans for the competition.
While Mandanda would only have served as back-up for Hugo Lloris, Deschamps feels his absence is a huge blow for team morale.
"Obviously, it's a big blow for Steve because, as he says, he had a difficult and complicated season with Marseille," he said.
"He was with us for two years (in World Cup qualifying), even though he did not play a lot as a goalkeeper, but he was bringing his joy to the squad.
"He's someone I know well because I had the chance to coach him for three years at Marseille. I am sad for him, his team-mates as well.
"Unfortunately, these things can happen and it was not possible for him to be available soon enough."
France get their World Cup campaign under way against Group E opponents Honduras on June 15.
