Allen tested positive for COVID-19 on Monday and entered league protocols, and Staley had been optimistic throughout the week that Allen could return in time to play.
Allen, who is in his ninth season, is tied for second in the NFL with 86 receptions and is 71 yards away from his fourth 1,000-yard season in the past five years.
Derwin James, meanwhile, appeared on the injury list Saturday with a hamstring injury and is listed as questionable. He leads NFL defensive backs with 100 tackles and is tied for 12th overall after missing last season due to a knee injury. He also has two interceptions, two sacks and three forced fumbles.
Williams, who is in his fifth season, already has a career high with 55 receptions. He had his third 100-yard receiving game in last week's 41-22 victory over Cincinnati with five catches for 110 yards. Williams also leads the league with seven catches of at least 40 yards.
Los Angeles (7-5) goes into Sunday's game in possession of the AFC's first wild-card spot, but it hasn't won consecutive games since early October.
The Chargers have had a recent run of COVID-19 cases. Defensive tackle Linval Joseph missed the past three games, while defensive linemen Jerry Tillery and Christian Covington and linebacker Drue Tranquill missed at least 10 days last month. Linebacker Joey Bosa sat out five days and tested negative leading up to the Nov. 21 game against Pittsburgh because he was an unvaccinated close contact.
Backup center Scott Quessenberry will also miss Sunday's game after being placed in protocols on Thursday.
In other moves, defensive back Ben DeLuca and receiver Jason Moore were elevated from the practice squad. Linebacker Kyler Fackrell was placed on injured reserve after having a knee procedure earlier in the week. He has 15 tackles in 12 games this season.
ESPN's Shelley Smith and The Associated Press contributed to this report.