The Brazil star returned from a month-long absence with a hamstring injury in Friday's 2-0 Ligue 1 victory over Lille.
However, with PSG already through to the next round head coach Thomas Tuchel has opted not to risk the fitness of the flamboyant forward.
Instead, Mauro Icardi, Angel Di Maria and Kylian Mbappe line-up in a front three for the Group A clash at the Santiago Bernabeu.
It marks the first time Neymar has started a Champions League match on the bench since November 2014 when he was at Barcelona.
There are few surprises for a Madrid side who are still yet to book their spot in the knockout stages, with a win against PSG guaranteeing a last-16 berth.
Gareth Bale remains on the substitutes bench amid an uneasy relationship with the Los Blancos faithful, following his celebration after Wales qualified for Euro 2020.
The forward held up a banner that read 'WALES. GOLF. MADRID. IN THAT ORDER' in an apparent dig at the Spanish press' perception Madrid have slipped down Bale's list of priorities.