Dempsey's breach of team protocol only became apparent on Thursday.
It's understood he was out drinking on Saturday night, and while the club insists he wasn't intoxicated, his behaviour broke team rules.
Essendon football operations manager Steven Alessio said there was no excuses for the indiscretion.
"Courtenay breached team discipline by going out while recovering from an injury," Alessio said.
"The players set high standards for each other and it's important they don't breach team rules under any circumstances.
"It's disappointing because Courtenay has been in fantastic form this season and he was set to make his return from injury."
Dempsey has been recovering from an ankle injury but on Wednesday had talked up his chances of returning to the side to play Brisbane on the club's own website.
"I am just resting it up to get it right for this week and hopefully get picked," Dempsey told BomberTV.
"I will just take it as it comes, train this week and see how I go."
Just 24 hours later the club has declared him unavailable for selection.
The Bombers VFL team plays Port Melbourne at 1pm on Saturday at Windy Hill.
A picture posted to Courtenay Dempsey's Instagram account on Sunday
Matt Thompson is a reporter for AFL Media. Follow him on Twitter @MattThompsonAFL
