Gasser, a junior, will use his redshirt season and will have two seasons of eligibility remaining, the school said.
Gasser has averaged 6.8 points and four rebounds per game in his first two seasons with the Badgers and was projected to start at point guard. He has made 45 percent of his 3-point attempts in his career.
No. 23 Wisconsin said Gasser will be re-evaluated this week and he is expected to have surgery.
After backing up Jordan Taylor the last two seasons, Gasser was Wisconsin's most experienced point guard. He averaged 34 minutes and 7.6 points per game last year, and has career averages of 6.8 points and 4.06 rebounds.
Gasser's injury means the Badgers could begin the season without two of their projected starters.
Forward Mike Bruesewitz is recovering from a freak accident in practice, when he gashed his shin against an exposed screw securing the basket. He needed 50 stitches, and is limited to the exercise bike.
Information from The Associated Press was used in this report.