Penney filled in as Tall Blacks captain in 2009 when incumbent Pero Cameron was unavailable and took over the role when Cameron retired to the coaching staff last year.
Over the past decade, he has emerged as a highly respected player in international basketball. In 2003, Penney became the second Kiwi - after Sean Marks - to appear in the NBA and has won championships in the NBA development league, as well as in Israel, Lithuania and Australia while playing for the Breakers.
He was most valuable player of the Australian NBL in 2009 and led the Breakers to their first title two years later.
The hot-shooting guard has appeared for the Tall Blacks at two Olympics and three world championships, and was the second-leading scorer overall (24.7 points per game) at the 2010 world championships in Turkey.
"When you lose your best scorer from the the last several years, the impact on the team has to be big," Tall Blacks ad coach Nenad Vucinic said. "We'll have to show strength and absorb this blow by everybody raising their level of performance.
"It could be a chance for others to step up, but it'll also be a challenge for our coaching staff to adjust to the different look of our team."
Vucinic will assemble his national squad early next month and will prepare the Tall Blacks for the Fiba Olympic qualifying tournament in Venezuela on July 2-8.
New Zealand faces Macedonia and Angola in pool play at the 12-team event with three spots still available in the London draw.