The conference said USC (3-0) did not have enough scholarship players available in a position group because of positive COVID-19 tests and contact tracing. The position group is the offensive line, a source told ESPN's Kyle Bonagura.
The game will be declared a no contest.
Colorado will instead host San Diego State on Saturday (3 p.m. ET, Pac-12 Network) at Folsom Field.
"We are disappointed for our players and fans and those from Colorado that Saturday's game will not be played, but the health and safety of everyone in both programs is of the utmost priority," Trojans coach Clay Helton said in a statement.
USC canceled in-person activities on Thursday and was preparing virtually for Colorado after a player showed symptoms for COVID-19, the school said earlier Thursday.
Two players tested positive for COVID-19 earlier in the week and another five were in isolation for contact tracing. USC canceled practice and closed its facility on Tuesday but returned to in-person practice on Wednesday after polymerase chain reaction (PCR) testing and contact tracing were completed under the guidance of Los Angeles County health officials.
The Pac-12 canceled two games earlier this week, which led to a pairing of Utah and Washington on Saturday in Seattle. USC and UCLA are the only teams in the Pac-12 South that played all of their first three scheduled games. Oregon and Oregon State also haven't missed a game in the Pac-12 North.
The Associated Press contributed to this report.