Welker resumed light physical activity Thursday. On Friday, he was formally ruled out of the Broncos' road game Sunday against the Houston Texans.
League and team sources also say Welker will be held out of Denver's regular-season finale Dec. 29 against the Oakland Raiders.
The team's hope is that Welker, who left games in Week 11 and Week 14 with concussions, will recover in time to play in the postseason. Welker continues to be evaluated by the team's medical staff and an independent doctor as part of the league's concussion protocol.
A third concussion in such a short span could end Welker's season, and one source said the player's well-being is "still the highest priority."
Welker has not been medically cleared to practice, but on Thursday he spent some time working with the strength and conditioning staff in the team's weight room. Coach John Fox said Welker also did limited on-field work outside.
"The exercise is picking up,'' Fox said after practice. "They're doing more and more with him in the weight room, running around out here a little bit and ... he's doing better every day.''
Welker has not practiced since leaving the Broncos' Dec. 8 victory over the Tennessee Titans shortly before halftime. He was taken from the field after being hit by safety George Wilson, having suffered a concussion as well as a neck injury on the play. Welker also suffered a concussion on Nov. 17 during the team's 27-17 victory over the Kansas City Chiefs.
Welker returned against the Chiefs after being checked for concussion symptoms but left for good after another four plays. He played the next week against the New England Patriots.
The Broncos (11-3) can earn a first-round bye and home-field advantage throughout the AFC playoffs with victories over the Texans and Raiders. There are also scenarios in which they can gain the same advantages with a win Sunday combined with losses by the Chiefs (who are home to the Indianapolis Colts) and the Patriots (at the Baltimore Ravens).
Offensive coordinator Adam Gase was asked Thursday if he had concerns about the offense's ability to continue on its torrid pace, especially on third down, without Welker.
"Not with the group we have," Gase said. "With [Andre] Caldwell, [Jacob] Tamme, [Eric] Decker being able to move around -- we've got a really good group of guys to fill in. Wes is a really good player and he's a hard guy to replace. But we've got a good group of guys that can fill in and make sure that we can put guys in position to make conversions."
With Welker a game-day inactive for last Thursday's loss to the San Diego Chargers, the Broncos scored a season-low 20 points and were 0-for-6 on third down in the first half.
However, Peyton Manning actually has been more effective this season without Welker. Manning's total QBR when Welker is off the field is 91.7, compared to 79.4 when he's been on the field, according to ESPN Stats & Information.