Parker, 19, will have surgery after suffering a complete tear -- not a sprain, as was initially diagnosed -- in the third quarter of the Bucks' dramatic 96-94 win Monday night in Phoenix.
Parker's knee buckled on a drive to the basket, after which he collided with the Suns' P.J. Tucker.
He had to be carried off the court by teammates and underwent an MRI on Tuesday in Milwaukee that revealed the tear.
Since being selected No. 2 overall in June by the Bucks, Parker had emerged as a top rookie of the year contender in Milwaukee's surprising 13-12 start, averaging 12.3 points and 5.5 rebounds in 29.5 minutes in 25 games.
He started his career with double-doubles in two of his first three games and was named the Eastern Conference rookie of the month for October/November.
Parker played one season at Duke before making the jump to the NBA.
Bucks forward John Henson and other figures from around the league reacted to the injury update on Twitter.
Sending one up for the young homie @JabariParker for a speedy recovery ! 🙏— John Henson (@_John_Henson_) December 17, 2014
@JabariParker praying for you, stay positive!— Isiah Thomas (@iamisiahthomas) December 17, 2014