"I have been in football for 40 years but I've never experienced anything like this. He let his team-mates down," Olsen told reporters after the 3-1 defeat to Italy in Milan on Tuesday.
The FC Nordsjaelland defender was named as a substitute after Olsen picked Simon Poulsen ahead of him. When Poulsen was injured in the warm-up, Mtiliga refused to play, Olsen said.
"I asked Patrick Mtiliga to warm up but he was so disappointed by our decision (to start Poulsen) that he said he couldn't play an international match. I immediately asked him to leave the dressing room and he has played his last international."
Ten-man Italy beat the Danes with goals from Riccardo Montolivo, Daniele De Rossi and Mario Balotelli. The Italians top qualifying Group B on 10 points from four matches, with Denmark on two points after three games.