The AC Milan striker, who was forced to leave last month's Confederations Cup campaign in Brazil early with a leg injury, will be unable to line up against the South American nation at Rome's Stadio Olimpico in a game organised in deference to recently elected Pope Francis, who is Argentinian.
A statement published on FIGC.com read: "No Italy-Argentina for Mario Balotelli. The Azzurro striker, who suffered a heavy knock to his knee in training yesterday, has not recovered and will return home.
"Balotelli left the Roman retreat after we had an audience with Pope Francis in the Vatican."
Roma striker Pablo Osvaldo is now expected to deputise for 23-year-old Balotelli alongside Genoa's Alberto Gilardino, while Milan forward Stephan El Shaarawy and Lorenzo Insigne of Napoli provide alternative options to Azzurri coach Cesare Prandelli.