The 28-year-old was due to fly from Melbourne to Sydney to take on England at the SCG on January 5.
In a statement released on Friday morning, Cricket Australia said Head tested positive after a routine PCR test and has been asymptomatic.
The batsman will now remain in isolation in Melbourne for seven days – per the Victorian Government’s current health requirements.
A Cricket Australia spokesperson said that the remainder of the Australian squad, their families and support staff underwent PCR and RAT tests on Friday morning local time.
Both the Australian and England squads are expected to separately travel to Sydney as planned today.
The spokesperson added: “As part of our testing procedures, we are PCR testing players, their families and our support staff daily.
“Unfortunately, Travis returned a positive Covid-19 result earlier today. Thankfully, he is asymptomatic at this stage.
“We anticipate that he will be available to play in the fifth Vodafone men’s Ashes Test in Hobart.”
Head is currently Australia’s leading run-scorer in the Ashes to date, scoring 248 runs at an average of 62.
The batsman could potentially be replaced by Usman Khawaja, whom he beat out for a spot in the Australia XI.
In the meantime, selectors have also added Mitchell Marsh, Nic Maddinson and Josh Inglis to the squad “as a precautionary measure”.
The news comes after England’s humiliation in Melbourne which saw Australia take an unassailable 3-0 series lead.
England’s collapse to 68 all out in the second innings of the Boxing Day Test was labelled “embarrassing” by a couple of former players and former Australia captain Ricky Ponting.