Little, 23, was due to play for Multan Sultans in the PSL. He experienced hamstring tightness while representing Pretoria Capitals in the SA20, and Cricket Ireland said that he had returned home "out of an abundance of caution".
Defending IPL champions Gujarat Titans had signed Little for INR 4.4 crore (€500,000 approx) at December's auction, making him the first active Ireland player purchased in the competition.
He is expected to return to fitness in time to fulfil his contract, and is targeting Ireland's three-match ODI series in Bangladesh next month as a possible return.
Mark Rausa, Ireland's head of sport science, physiotherapy and medical services, said: "Josh reported experiencing some tightness in his hamstring towards the end of his time in the SA20 League.
"After reporting this to medical staff at Pretoria Capitals, he was sent for an ultrasound scan that was inconclusive. Out of an abundance of caution, Josh decided to return home for further tests and treatment with the Cricket Ireland medical team.
"An MRI scan showed no significant injury in the hamstring, but he will remain in Dublin to complete a course of rehab, strength and conditioning and bowling workload management in preparation for the Indian Premier League (IPL) beginning the end of March, and a subsequent busy period of International cricket for Ireland."
Ireland's ODI series in Bangladesh will begin on March 18, followed by the T20Is that will go on till March 31, the same day the IPL kicks off with Titans taking on Chennai Super Kings in Ahmedabad.