"I felt great all week," Grace said. "Last night, I was tired and thought it had to do with the altitude. This morning, I notified the PGA Tour about my symptoms before going to the golf course. I wanted to get tested out of respect for my peers and everyone involved with the tournament."
Grace was two points back (equivalent to one birdie) and in a tie for second going into the weekend at the modified Stableford scoring event in Truckee, California.
"While it is unfortunate given my position on the leaderboard, the most important thing is our health," he continued.
Grace, who currently sits 156th in the FedEx Cup standings, will also miss next week's PGA Championship because of the PGA Tour's mandatory 10-day self-isolation requirement. He has played in 22 consecutive major championships.
The South African becomes the eighth known PGA Tour player to test positive for COVID-19 and first to do so at a tournament since the first week of July.