The summer arrival from Manchester City scored his second goal for Atletico on Thursday evening, registering a late winner for Diego Simeone's side against Celta Vigo in Spain's top flight.
The 24-year-old is expected to be brought back into the starting side for the Madrid derby, which could mean that Alexander Sorloth misses out on a spot in the XI.
Antoine Griezmann and Alvarez are likely to be the front two, while Rodrigo De Paul and Samuel Lino should also be recalled after dropping to the bench against Celta.
Conor Gallagher is also expected to be in the side, with head coach Simeone once again set to line his team up in a 3-5-2 formation at Wanda Metropolitano.
Atletico did not suffer any fresh fitness concerns against Celta, but they will again be without the services of Thomas Lemar, Cesar Azpilicueta and Pablo Barrios for the clash with the reigning champions.
As well as Sorloth, Angel Correa is expected to be kept in reserve, while Rodrigo Riquelme and Nahuel Molina should also be among the substitutes on Sunday night.
Atletico Madrid possible starting lineup: Oblak; Le Normand, Gimenez, Reinildo; Llorente, De Paul, Koke, Gallagher, Lino; Alvarez, Griezmann