Draxler returned to full training with Schalke this week - five months since his last league match for the Gelsenkirchen-based club where he tore a tendon in his right leg - ironically against Augsburg.
But Di Matteo denied the 21-year-old will be in Schalke's squad on Sunday, claiming Draxler needs at least one more week of training before he can get some Bundesliga minutes.
"The game on Sunday is too early for Julian Draxler," the 44-year-old coach said at a media conference on Friday.
"He trained with us this week, his recovery is going well, but I don't think he will be fit enough for this weekend.
"We'll have to see how things are next weekend."
Sunday's game will see two teams desperate for a win face each other at the SGL Arena.
Augsburg (38 points) sit sixth in the Bundesliga standings but have only tasted victory once in their past seven league matches, while fifth-placed Schalke (39) are in only slightly better form with one win in six games.
They are both trying to stay ahead of seventh-placed Hoffenheim (37) in the Bundesliga's UEFA Europa League qualifying berths, while Di Matteo still hopes his team can challenge for Champions League qualification.
Last week's 1-0 loss at home to fourth-placed Bayer Leverkusen saw Schalke drop six points behind Roger Schmidt's men.
But Di Matteo insists Schalke remain in the hunt for a top-four finish as they play the bottom three teams - Hamburg, Paderborn and Stuttgart - in the final four rounds, while Bayer face a much more difficult end to the season.
Schmidt's team play leaders Bayern Munich, third-placed Borussia Monchengladbach and Hoffenheim in their last four matches.
"I'm a positive guy and I hope that we'll get as many points as possible and keep up with the other teams," Di Matteo said.
"When I took a look at the team during the last few days and the many players who have returned, I saw that we have plenty of options in this squad. We are a bit more optimistic."
Di Matteo may be able to include number one goalkeeper Ralf Fahrmann, striker Eric Choupo-Moting and defender Sead Kolasinac in his starting line-up against Augsburg after stints out with injury.
