The Colombian ace suffered a strain to the abductor muscle in his left leg while on international duty earlier in the month and was fighting for fitness after missing his side's 3-2 victory against Levante last weekend.
Falcao trained seperately from his team-mates in Friday's training session and was left out of Manzano's 19-man squad for the match.
Tiago, Silvio and Antonio Lopez, all injured, will not take part in the match either.
The news about Falcao's absence comes as a heavy blow to Atletico, as the striker, who was signed in the summer, has scored nine goals in all competitions this season.
Atletico are ninth in La Liga's standings, with 12 points from 12 matches, while Madrid are at the top of the table, on 31 points.
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