The West Ham player's embarrassing blunder in their opening game against the United States cost England a point and he found little sympathy from the hard-nosed Italian.
Reports said Green did himself no favours by fluffing several routine shots from England goalkeeping coach Ray Clemance in training on Thursday.
Capello instead opted for the more experienced David James, who has himself earned the nickname "Calamity James" for previous mistakes.
Green's fumble of a harmless-looking Clint Dempsey shot, with the ball deflecting off his gloved hands and across the goalline, came in for ridicule and his omission Friday could be very costly.
Any England goalkeeper guilty of a clanger is given merciless treatment by the national press, with international careers often then brought to a shuddering halt.
David Seaman, Paul Robinson and Scott Carson can all testify to that.
Debate has raged all week over whether Green should go, and with Capello attracting unaccoustomed criticism for selecting him in the first place he clearly decided a change was needed.
With headlines like "Cock-up keeper Green wrecks dream start," and "Worst Howler Ever" all over the British press, it was not surprising that he made the decision he did.
Capello had been due to meet with the 30-year-old Friday morning to judge his mental state, and clearly it wasn't what it should be.
As well as living up to his reputation as a disciplinarian, Capello also proved he can be unpredictable.
On the eve of the match he suggested anyone who makes a mistake deserved a second chance.
"Everyone can make mistakes, a goalkeeper, defender, a midfielder or a forward," he said. "I judge a player on his quality and not on his mistakes."
How Green handles this latest setback remains to be seen.
But he proved after the now infamous fumble that he is not scared to face the facts, fronting the press then to declare: "I'm 30. I'm a man. I'm strong enough to take it and move on and be ready for another game if selected.
"I've made mistakes in the past," he added. "If I get flack, so be it. I take responsibility for my problems and move on."
Teams:
England: 1-David James; 2-Glen Johnson, 18-Jamie Carragher, 6-John Terry, 3-Ashley Cole; 7-Aaron Lennon, 4-Steven Gerrard, 8-Frank Lampard, 14-Gareth Barry; 21-Emile Heskey, 10-Wayne Rooney.
Algeria: 23-Rais Ouheb Mbouli; 2-Majid Bougherra, 5-Rafik Halliche, 4-Antar Yahia, 3-Nader Belhadj, 13-Karim Matmour, 19-Hassan Yebda, 8-Medhi Lacen, 15-Karim Ziani, 7-Ryad Boudebouz, 21-Fouad Kadir.
Referee: Ravshan Irmatov (Uzbekistan)