Bills coach Doug Marrone made the announcement after the team's practice on Friday night.
Kevin Kolb, Manuel's competitor for Buffalo's starting quarterback job, will serve as an emergency QB as he makes his way back from a left knee injury.
Kolb returned to practice on Friday, but was limited and did not take part in any team drills after missing time due to a death in the family. Kolb had been excused from training camp since Monday afternoon.
At Friday's practice, Kolb went to the locker room a little more than an hour into the workout to receive treatment on his knee. He hurt the knee last Saturday when he tripped on a mat between Buffalo's practice fields.
"Not having him in the treatment, being away for a couple days because of a personal issue, I think that it's a little tight," Marrone said.
"He is going to dress, he is going to be there and then knock on wood if we don't need the third quarterback, if we do need one we'll put him in there and obviously he'll just be handing the ball off and not put him in jeopardy."
Manuel was the 16th overall selection in the draft.
"I'm very excited," Manuel said about his first exhibition start. "I think we've worked out very hard these past two weeks and I know I'm going to be very excited to play against a different team. ... I think the biggest thing is to just go out and relax and play football."
With Kolb unlikely to play, undrafted rookie Jeff Tuel will serve as Manuel's backup against the Colts.
Cornerback Leodis McKelvin (groin) and wide receiver Brad Smith (undisclosed) will not play. McKelvin, who had groin surgery in the offseason, has been dealing with soreness since the team's night practice on Monday. Marrone said that McKelvin met with Buffalo's doctors Friday night for further evaluation.
The status of defensive end Mario Williams (sore foot) will be determined in warmups prior to Sunday's game, Marrone said. Williams participated in practice Friday, but is making his way back after missing the start of camp.