Chelsea head coach Enzo Maresca says Conor Gallagher is not training with the main first-team squad and is unavailable to face Manchester City on Sunday.
The England international, 24, was pictured in Atletico Madrid's Metropolitano Stadium after Chelsea accepted a £33m bid from the Spanish club.
But he has been unable to complete his move after a deal for striker Samu Omorodion to go in the opposite direction collapsed, leaving Atletico without the funds to sign the midfielder.
Chelsea are now trying to sign forward Joao Felix from the Spanish club but Gallagher has been recalled to London and is training in a separate group at their Cobham training ground.