The IOC said 25 of the 26 Olympic sports were elected as core sports for the 2020 Games which will also include rugby and golf, making their first appearance in 2016.
Wrestling joins baseball and softball, making a joint bid, martial arts karate and wushu, rollersports, wakeboarding, squash and sports climbing as candidates for the one empty spot.
Baseball and softball were taken off the programme in 2005.
The IOC executive board will meet in St Petersburg in May to determine which of these will be put to the vote in September.
Wrestling had 344 athletes in total at the London Olympics, competing in greco-roman and freestyle disciplines. Women's events were introduced at the Athens 2004 Olympics.
Major Blow
Russian wrestling federation chief Mikhail Mamiashvili was shocked by the decision but was confident his sport would remain in the Games.
"I'm absolutely convinced this ancient sport will retain its status," Mamiashvili, who won an Olympic gold medal in 1988, told Reuters.
"But FILA (the world amateur wrestling federation), the whole wrestling community must take a more active role in the process. We need to make some drastic changes in the sport, make it more attractive, especially for TV audience," he said.
Olympic exclusion will be a major blow to the sport's popularity and financial stability as the Games are a global platform for the promotion of smaller, less established sports.
"It is very unfortunate," Satpal Singh, coach of India's two-time Olympic medal winner Sushil Kumar, told Reuters. "It is being played from the first Olympics and is played all over the world."
FILA, contacted by Reuters, did not want to comment on the decision.
International Modern Pentathlon Union president Klaus Schormann welcomed the news.
"In the last few years we acted and took decisions to make our sport more telegenic and more compact," Schormann told Reuters. "So every good news is further motivation for us."
Madrid, Tokyo and Istanbul are bidding to host the 2020 Olympics with a decision also to be taken in September.
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