Yao was leaping for a blocked shot as Chuck Hayes and Tim Thomas hit the floor beneath him. Yao's knee appeared to get caught under Thomas' body and Yao immediately grabbed his knee and screamed in pain.
Yao was taken to Memorial Hermann Hospital in Houston, where an MRI test revealed a fracture of Yao's right tibial plateau, trainer Keith Jones said.
The Rockets initially said Yao had only suffered a bone bruise. Now, Jones said he hopes the injury will not require surgery.
"It's a non-displaced fracture, so nothing is way out of the way or out of whack," Jones said. "We think he'll do well with just rest. An option would be to do something more, but we're hoping that won't need to be done."
Without Yao, the Rockets lost to the Clippers 98-93.
The injury ruins the best start of Yao's career. He was averaging 27 points and nine rebounds -- both career bests -- and had topped 30 points in four consecutive games before scoring 22 in Friday's 97-78 victory at San Antonio.
The Rockets were already playing without six-time All-Star Tracy McGrady, who sat out for the seventh straight game with back spasms.
The 7-foot-6, 310-pound Yao now faces rehabilitation for the third time in a year. Last December, he underwent surgery for a toe infection and missed 21 games. Last April, he broke his left foot in Utah and missed the final four games of the season.