Ellerbe, 31, will be placed on injured reserve to start training camp. But the source said he is expected to be healthy within about three weeks.
The news of the Saints' plans was first reported by NFL Network.
Ellerbe's loss is a disappointment because he had been a dynamic playmaker at times when healthy over the past two years. But it won't be a devastating blow for the Saints, who loaded up on linebacker depth this offseason and adapted to playing without Ellerbe as he dealt with a series of nagging injuries.
Ellerbe's promising career has been derailed by injuries over the past four years with the Miami Dolphins and Saints.
He reached his peak as a key member of the Baltimore Ravens' 2012 Super Bowl championship team, then signed a $35 million contract with Miami in 2013. But he missed 15 games for the Dolphins with a major hip injury in 2014. Then, after being traded to New Orleans in 2015, Ellerbe missed a combined 17 games as a result of hip, toe and quad injuries.
Ellerbe had 83 tackles, four sacks and a forced fumble in two years with the Saints. In his eight-year career, he has 368 tackles, 10.5 sacks, three interceptions and two forced fumbles. He also had an interception in the AFC Championship Game during Baltimore's Super Bowl run.
The Saints made linebacker depth a priority this offseason, signing veterans A.J. Klein and Manti Te'o in free agency, then drafting Florida's Alex Anzalone in the third round. Klein, Te'o and Craig Robertson are expected to compete for the starting middle linebacker job, with all three of them candidates to replace Ellerbe as the starting weakside linebacker. Backups Nate Stupar, Stephone Anthony and Michael Mauti will also compete for roles on defense and special teams.
The Saints also signed third-year player Kristjan Sokoli on Tuesday, his agent Brett Tessler said on Twitter. Sokoli, 25, spent the past two years with the Seattle Seahawks and Indianapolis Colts, appearing in just one game. He has primarily played on the defensive line, but the Saints plan to convert the 6-foot-5, 300-pounder to the offensive line.
New Orleans also signed veteran offensive lineman Martin Wallace, his agent said on Twitter, and undrafted rookie cornerback Dejaun Butler. Wallace, 27, has bounced around the NFL since originally signing with the Cleveland Browns as an undrafted rookie in 2013, appearing in only one career game. Butler, who played at Hawaii, auditioned with the Saints during minicamp tryouts this summer.