The Portuguese star was left out because of injury, with Angel Di Maria starting in his place, as Los Blancos look to reach the Champions League last four.
The Portuguese forward scored one of the Blancos' goals in the first leg of the Champions League quarterfinal with last season's runner-up as Madrid romped to a 3-0 victory at the Santiago Bernabeu.
The 29-year-old was substituted with a knee problem in that European match and was rested over the weekend to help recover in time for the return leg at Signal Iduna Park.
However, he did not finish training on Monday and was considered a major doubt to feature for Carlo Ancelotti's men Tuesday as they seek their fourth successive semifinal appearance in the competition.
His absence from the lineup shows he is not yet fit enough to start again in Ancelotti's eyes, although his presence on the bench means he could be brought on should Madrid need a spark in the second half.
In his place, Angel Di Maria is bumped up from midfield into the forward role he held last season, with Gareth Bale on the opposite flank and Karim Benzema in the middle.
Ronaldo has scored 14 goals in the Champions League this season — equalling the record scored in one campaign set by Barcelona and Ballon d'Or rival Lionel Messi.
Real Madrid XI: Casillas; Pepe, Ramos, Coentrao, Carvajal; Alonso, Modric, Illarramendi; Di Maria, Benzema, Bale. Subs: Diego Lopez, Varane, Cristiano Ronaldo, Casemiro, Nacho, Morata, Isco.