The Argentine defender signed late in the transfer window predominantly as cover for Vincent Kompany but hurt his knee during a practice match for players not on international duty.
A scan revealed the injury was not as serious as first feared and, although he will not require surgery, the defender is expected to be out for six weeks.
A City statement confirmed: "A knee injury sustained in training is set to keep new arrival Martin Demichelis out for around six weeks. The club doctor confirmed a scan last night revealed ligament damage, but that surgery is not required."
The injury leaves Manuel Pellegrini with Matija Nastasic and Joleon Lescott as his only two fit centre-backs, as the Manchester club are currently also without the services of Kompany and Micah Richards.
Kompany is out with a groin injury while Richards recently resumed training following a hamstring tear.