The Manly Warringah Sea Eagles will be the first team in the competition ever to don a kit which promotes LGBT inclusivity in the sport.
Some players say they weren’t consulted and object to the move on religious and cultural grounds, local media report.
The club’s chairman says he is disappointed but respects their wishes.
“We don’t want those players to be outcasts, but as a club we celebrate and support everyone,” Scott Penn told the Sydney Morning Herald.
“We’re not going to force them to play, but we’re committed to the jersey and we’re committed to inclusion.”
Prime Minister Anthony Albanese praised Manly for its stance.
“It’s important in Australian society that we respect everyone for who they are,” he said.
It means Manly will be missing key players when they face the Sydney Roosters on Thursday – a game that could shape their chances of making the NRL finals.
Under NRL rules, players from the same team cannot wear different jerseys.
Former Manly star Ian Roberts – the first-ever former NRL player to come out as gay – says the decision by the seven players “breaks his heart”.
“It’s sad and uncomfortable,” he told Sydney’s Daily Telegraph.
The players’ stance has sparked a backlash online. The jersey sold out in adult sizes in only two days.
“What infuriates me (and always has) is that players will boycott over a rainbow but never boycott a teammate if he’s been accused of violence against women or any other morally reprehensible behaviour that they would all agree they don’t condone,” wrote Pam Whaley.
It isn’t the first time an Australian athlete has objected to wearing a pride jersey. Last year AFL Women’s player Haneen Zreika missed a game after declining to don the jersey on religious grounds.
Few Australian sport stars have come out. Mr Roberts and others say homophobia remains a big issue among fans and players in the country’s top competitions.
Adelaide United footballer Josh Cavallo – who came out in October – has called out the abuse directed at him by crowds over his sexuality.
In 2015 Israel Folau – who has played rugby league, rugby union and Australian Rules football at the highest levels – was controversially sacked by Rugby Australia for making anti-gay posts on social media.