The £37.1million recruit from Chelsea in January has yet to find his best form since moving to Old Trafford and pays with his place in the final Spain squad before head coach Vicente del Bosque names his preliminary World Cup party in May.
Del Bosque found no room in his 22-man squad for Chelsea striker Fernando Torres, while Atletico Madrid's David Villa also dropped out.
The squad was announced at the Spanish Footballers' Association headquarters on Friday morning.
Villa's club-mate Diego Costa could make his Spain debut after switching nationality, having previously made two appearances in friendly internationals for his native Brazil.
Costa had been in Spain's squad for autumn friendlies against Equitorial Guinea and South Africa, but injury forced him to withdraw.
He will be on familiar territory should Del Bosque select him, with the clash against the Azzurri to be played at Atletico's Vicente Calderon stadium.
Del Bosque played down the significance of his squad selection on World Cup plans, saying in quotes reported by the Spain team's official Twitter feed: "This is a list only for the match against Italy. It doesn't mean anything for Brazil 2014."
Spain squad for friendly against Italy in Madrid on March 5:
Casillas (Real Madrid), Reina (Napoli), Valdes (Barcelona); Juanfran (Atletico Madrid), J Martinez (Bayern Munich), Ramos (Real Madrid), Alba (Barcelona), Azpilicueta (Chelsea), Albiol (Napoli); X Alonso (Real Madrid), Busquets (Barcelona), Xavi (Barcelona), Koke (Atletico Madrid), Thiago (Bayern Munich), Iniesta (Barcelona), Navas (Barcelona), Cazorla (Arsenal), Fabregas (Barcelona), Silva (Manchester City); Diego Costa (Atletico Madrid), Negredo (Manchester City), Pedro (Barcelona).