Contador, who announced on Monday this year's Vuelta would be his last professional race, will be bidding for a fourth title after his triumphs in 2008, 2012 and 2014.
The number one bib is usually reserved for the defending champion, but Movistar's Nairo Quintana will not be lining up in the French city of Nimes on 19 Aug.
Last year's runner up, Tour de France champion Chris Froome, would usually be next in line but organisers have handed it to the Trek-Segafredo rider as a mark of respect.
"That Alberto chooses Spain and La Vuelta to call it a career is a great honour for the whole organisation," Javier Guillen, general director of the Vuelta, said in a statement.
"We are wholeheartedly grateful to the generosity he always demonstrated as a rider and that he shows once again with this decision. Alberto is, and will forever be, part of the history of cycling in our country and elsewhere."
Contador is one of only six riders to have won all three Grand Tours, although two of his nine titles (the 2010 Tour de France and 2011 Giro d'Italia) was expunged from the record books because of a doping ban.
This year's three-week race features a stacked lineup including Froome and multiple Grand Tour winner Vincenzo Nibali (Bahrain-Merida), Fabio Aru (Astana), Romain Bardet (AG2R), Warren Barguil (Sunweb) and Orico Scott trio of Esteban Chaves, Adam Yates and Simon Yates.
SBS will broadcast and live stream all stages of the Vuelta a España live from 19 August to 10 September.