Diaz sustained the injury during the first period of Sunday’s 3-2 Premier League loss for Liverpool against Arsenal.
With his knee in a brace, the 25-year-old Colombian exited the Emirates Stadium on crutches.
Diaz does not need surgery, according to scan results, but the injury is expected to keep him out until after the World Cup, which begins on November 20.
For Jurgen Klopp’s faltering team, who are 14 points down of Premier League leaders Arsenal, Diaz will miss at least 10 games.
Another setback for Liverpool. Diaz joined from Porto in January and has since been a significant influence.
By the time the Premier League begins in December, after the World Cup, he hopes to be back in play.
Trent Alexander-Arnold, who sustained an ankle injury against Arsenal, is awaiting the results of testing on his condition. The Reds already have a number of injury issues.