The German international had to be substituted in the 44th minute of City's 2-0 Premier League win over Watford at the Etihad Stadium on Wednesday after an accidental collision with Nordin Amrabat.
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Manager Pep Guardiola revealed afterwards that he had sustained suspected knee ligament damage. "We are going to miss him for a long time," said Guardiola. "This is the worst news. I'm so so sad. The doctors think he has ligament damage, but he doesn't know exactly [how serious it is].
"We will know tomorrow [Thursday], but it doesn't look good. I think it will be several months, which is why he is so sad about it."
Gundogan, 26, joined City from Borussia Dortmund in June for a reported fee of £20 million.
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He had dislocated his kneecap in May while training with Germany, which ruled him out of Euro 2016, whereas spinal surgery had previously cost him the entire 2013-14 campaign.
Initially sidelined after undergoing surgery at the end of last season, he has impressed since making his debut in a 4-0 Champions League win over Borussia Moenchengladbach on September 14.
To date, Gundogan has made 15 appearances for City in all competitions, scoring five goals.
His injury cast a long shadow over a home victory for City — their first since beating Bournemouth on September 17 — that was secured by goals from Pablo Zabaleta and David Silva.
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