The world number two improved his two-over par first round score to card a level par 72 but that was not good enough to keep him in the tournament at Carton House, County Kildare.
The 24-year-old Northern Irishman was 11 shots off the lead, held jointly by American Peter Uihlein and England's Robert Rock on nine under.
Rock shot a six-under-par 66 to join Uihlein at the top of the leaderboard while both were being pressed by former Ryder Cup captain Jose-Maria Olazabal, after a 69 put him in a group on seven under par and joint second.
Overnight leader Oscar Floren of Sweden could not match his first round 66 but did manage to produce another sub-par round of 71 to join Spaniard Olazabal on seven under for the tournament.
Twice major winner McIlroy's form has dipped alarmingly. In the last five months of 2012 he won four tournaments and was top of the world rankings but after changing his club manufacturer he has recorded just one top-five finish in 13 events, including this one, in 2013.
The 142nd British Open is at Muirfield from July 18-21.