The 28-year-old has been a standout performer for the Citizens and one of the first names on the teamsheet for Pep Guardiola this season, starting 31 of his 38 appearances across all competitions.
However, Ake - who recently returned from a hamstring injury - was forced off with a muscle problem in the second half of City's 2-1 Premier League victory over Leeds United on Saturday.
The Dutch defender was absent from team training on Monday morning and Man City have since confirmed that he will not travel with Guardiola's 21-man squad to the Spanish capital.
Kyle Walker came on as Ake's replacement against Leeds and could deputise again on Tuesday against Real Madrid, joining Ruben Dias and Manuel Akanji in a back three, while John Stones continues in his hybrid midfield role.
Aymeric Laporte, a left-footed defender like Ake, is also an option for Guardiola, while 18-year-old Rico Lewis, who played at left-back for the final half-hour against Leeds, and Sergio Gomez are two more defenders in contention to feature.
On a positive note, Cole Palmer has been selected in Guardiola's 21-man squad after missing the last three Premier League games with an ankle problem.
Real Madrid, meanwhile, will be without Eder Militao (suspended) and Dani Ceballos (quadriceps), while Ferland Mendy has taken part in team training following a lengthy spell out with a calf issue but has not been selected in Carlo Ancelotti's 22-man squad.
Manchester City's 21-man squad vs. Real Madrid in full:
Goalkeepers: Ederson, Stefan Ortega, Scott Carson
Defenders: Kyle Walker, Ruben Dias, John Stones, Aymeric Laporte, Sergio Gomez, Manuel Akanji, Rico Lewis
Midfielders: Kalvin Phillips, Ilkay Gundogan, Rodri, Kevin De Bruyne, Bernardo Silva, Cole Palmer
Attackers: Erling Braut Haaland, Jack Grealish, Julian Alvarez, Riyad Mahrez, Phil Foden