Clubs had until midnight on Tuesday to submit the 25 players they wanted to contest the final rounds of Europe's elite club competition.
Thegoalmac understands Odegaard has been included by the defending champions despite the plethora of options available to coach Carlo Ancelotti.
The 16-year-old was signed by Madrid last month from Stromsgodset, penning a three-and-a-half-year deal after opting for the Bernabeu following a tour of Europe's major clubs.
He has been training predominantly with the Castilla squad since, under the watchful eye of coach Zinedine Zidane, although his ability has caught the eye of several of Madrid's big-name players, including Gareth Bale.
Odegaard, already a full Norway international, made his first appearance in a Blancos shirt earlier on Wednesday and impressed, playing a major part in two goals as Castilla drew 3-3 in a friendly with Beijing Guoan.
Should he play against Schalke in the last 16 he will become the youngest player to play in the Champions League, beating the current record held by Celestine Babayaro, who was 16 years and 87 days when he appeared for Anderlecht against Steaua Bucharest in 1994.
