Team owner/general manager Jerry Jones said earlier Tuesday that Spencer might need microfracture surgery, though it was unclear later whether Spencer would have that procedure.
"It's a real setback," Jones said on his radio show on KRLD-FM.
Spencer is expected to be 100 percent by January or February, according to team physician Dan Cooper.
Spencer was officially placed on season-ending injured reserve Wednesday, with the Cowboys signing cornerback Chris Greenwood off the Detroit Lions' practice squad to fill his roster spot.
Spencer underwent surgery on the troublesome knee July 25 and has practiced fewer than five times and played in just one game, the Week 2 road loss to the Kansas City Chiefs.
The plan was for Spencer to play on third downs only against the Chiefs, but he played 34 snaps and had two tackles and one quarterback hurry.
The next day, Spencer reported soreness in his knee but thought it was normal after playing in a game for the first time this season. When the knee didn't respond to treatment, the Cowboys ruled Spencer out of the Week 3 game against the St. Louis Rams.
Spencer said his knee was sore the morning of the Rams game, and it prevented him from trying to participate in pregame warm-ups.
Last week, Spencer was asked if he needed microfracture surgery and he said no, despite ligament damage in his knee. Spencer said he was frustrated that his health wasn't coming together.
"I have, like, soft cartilage on the inner side of my knee that's causing [the pain]," said Spencer, who will be a free agent after this season. "It's not stopping the banging of the bone. It's going to take a little bit more time to heal, and we really don't have time right now."
The Cowboys franchised Spencer, costing them $10.6 million, instead of allowing him to test the free-agent market in the offseason. He was coming off a season in which he had a career-high 11 sacks and was named to the Pro Bowl as an injury replacement for Green Bay Packers linebacker Clay Matthews.
"Now here is a case of a guy that you almost have to tie him up to keep him off the field," Jones said. "You got to tie him up to [stop him from] taking the snaps. He was so diligent in his rehab and so focused on his rehab and the guy, the individual, I have the most empathy for is Spencer, because of the type of person that he is."
The Cowboys were faced with a similar situation in 2007 with wide receiver Terry Glenn. The Cowboys wanted Glenn to take a pay cut because he had ligament damage in his knee, which could lead to microfracture surgery. Glenn refused a pay cut and was released before the start of training camp.
ESPN.com Cowboys reporter Todd Archer contributed to this report.