Sitting six points ahead of City, though having played a game more, the Gunners know Sunday's clash could decide the destiny of the Premier League title.
Speaking this afternoon, Arteta confirmed the match will come too soon for England attacker Saka, who hasn't featured since the EFL Cup final defeat to City last month.
The Spaniard said: "Bukayo is out. That is for sure.
"With B, we are handling it to protect the play first of all and then to perform as well as he possibly can. The idea is that we can possibly deliver that, so that's a challenge.
"He's just starting to do some stuff so let's see that progression, how quickly we can go through it and then wait. But at the moment it's not available."
Fitness tests
Arteta also confirmed Riccardo Calafiori, Martin Odegaard and Jurrien Timber all are facing late fitness tests, with injury clouds hanging over all three senior players.
"Yeah we will try again, some players are quite close but the turnaround is short. We will try tomorrow," said the manager.
Arteta also said Noni Madueke's injury suffered midweek against Sporting "didn't look too bad" and he is a player who "pushes through pain".
"We have another training session tomorrow. It didn't look that bad after the game, and he is someone who pushes through pain. But we will have to wait and see."
Biggest game of the season
Meanwhile, Arteta concedes Sunday's clash is the biggest game of the season for Arsenal. A win will see the Gunners go nine points clear at the top of the table, with City manager Pep Guardiola admitting earlier today that anything but a win would hand the title to Arsenal.
"It is certainly the most important one because it is the next one," said Arteta, who also insists they will play to win.
"We have earned the opportunity to win against arguably the best team and the best manager this league has ever seen. We will prepare the game to win it, that is for sure."
Arteta is banking on some momentum after reaching the Champions League semifinals this week.
"We give huge credit to the players for what they have done," said the manager, who also addressed his pre-match "bring the fire" rally cry.
"Every game we use different themes to try and prepare in the right way," he stated.
Asked about playing for a draw, Arteta bristled, insisting: "We will not spend one second talking about that. We prepare every game to win."
Manninger
Arteta was also asked about the tragic passing of former Arsenal goalkeeper Alex Manninger. The 48-year-old was killed on Thursday in a railway accident.
"Some very sad news, obviously," said Arteta. "And we send his family and part of his journey our condolences and love. It was shocking news and a difficult one to take."
City tactics
Arteta addressed doubts about whether Arsenal can handle City after losing the EFL Cup final.
"They've done it in the past. There are some moments that we are so low (deep) we didn't make the right decisions," said Arteta.
"Sometimes we break that press and then we didn't take advantage of that. Every tactic has its issues, its opportunities as well and in relation to what they do, we will adapt, and we will do the same."
On Guardiola's claims that the title will be Arsenal's if they beat City on Sunday, Arteta was non-committal.
"I don't know, there are six games to go, it is a really important one for both teams," he said. "Winning a game in the Premier League, so after this, there are many difficult matches."
Returning to their lengthy injury list, Arteta insists it has been a situation they've been able to manage for the entire campaign.
"We have coped with that all season," he reflected. "When you look at the stages and those missing for big periods, it is not normal where we are.
"The way the players have stepped up in this moment. We are still really strong."
Arteta also had a word for City captain Bernardo Silva, who announced this week that he is leaving the club.
A former City assistant coach, Arteta stated: "Incredible player and person as well. I watched him against PSG with Monaco. He lives the game, the desire, the hunger that he has.
"He is a top guy."