The 37-year-old LA Galaxy midfielder was left out to allow Pearce to select Manchester City defender Micah Richards as his third over-age player along with Welsh duo Ryan Giggs and Craig Bellamy.
Beckham responded with a statement underlining his disappointment and it is believed leading figures in the British Olympic heirarchy including Lord Coe, who worked closely with the player during London's successful bid to host the event, were also unhappy that such a globally recognised figure would no longer be part of the Games.
While tickets for many of the Olympic events have already sold out, there has been less interest in the football, which is seen in Britain as a poor quality alternative to the Premier League and Champions League fare served up during the club season.
At one stage, there were over a million football tickets still available and Beckham would have sparked an increase in sales.
However, Pearce was well within his rights not to pick a player clearly in the twilight of his career and it is impossible to deny that his selection would have been motivated by profits rather than sporting merits.
"Right through this process I have had carte blanche to pick whatever players I regard as best," Pearce said.
"Form plays a big part and I don't think there is a manager around who picks on sentiment. I have to be comfortable when I have made decisions based solely on football grounds alone, nothing else."
Beckham's absence overshadowed Pearce's decision to include 13 Englishmen in his squad and no players from Scotland or Northern Ireland.
Team GB will hardly be a fully representative squad, but at least the likes of Chelsea's Ryan Bertrand, Manchester United's Tom Cleverley and Swansea's Scott Sinclair now have the chance to step out of Beckham's shadow and impress on a global audience with their precocious talents.
Pearce's side, shorn of the injured Gareth Bale, have been drawn to play Senegal, UAE and Uruguay in Group A in the 16-team men's event, but the favourites are Brazil and Spain.
Brazil could include gifted strikers Neymar and Alexandre Pato and aging legend Ronaldinho as the five-times world champions look to end their wait for Olympic gold.
The Brazilians won silver in 1984 and 1988 and bronze in 1996 and 2008 and it would be especially sweet to win this year's title as the current holders -- their bitter rivals Argentina -- failed to qualify.
"Of course the final goal is to win the 2014 World Cup, but we can't forget that in 2012 we have to go after an unprecedented gold medal," federation president Jose Maria Marin said.
"It's a title Brazil still doesn't have and I'll make sure I'll provide all the working conditions the team needs."
Spain, the current world and European champions, will also be a major threat, especially after naming Cristian Tello, Isaac Cuenca and Martin Montoya, three of Barcelona's rising stars, in their squad along with Manchester United goalkeeper David de Gea.
Wembley, Old Trafford, Newcastle's St James' Park, the City of Coventry Stadium, the Millennium Stadium in Cardiff and Hampden Park in Glasgow are all hosting matches in the men's event and also the 12-team women's competition, which was won by the United States in 2008.