The surgery is an arthroscopic procedure and will be performed at the Hospital for Special Surgery in Manhattan by New York Mets team physician Dr. David Altchek at the request of Pineda and his agent, Fern Cuza.
According to Yankees team doctor Chris Ahmad, who will assist in the surgery, the recovery for such an injury is 12 months from the date of the surgery barring any setbacks in rehab, meaning Pineda will not be available until May 2013 at the earliest.
Yankees general manager Brian Cashman called the injury "a tragic diagnosis" for the 23-year-old right-hander acquired in the offseason from the Seattle Mariners in exchange for Jesus Montero, the jewel of the Yankees' farm system.
Pineda, who suffered from diminished velocity on his fastball all spring and has been on the disabled list since complaining of pain and weakness behind his right shoulder after his last preseason appearance on March 30, was shut down 15 pitches into his first rehab start in Tampa on Saturday after experiencing pain again.
"For this year, it's a loss," Yankees manager Joe Girardi said. "He was a guy that we were counting on this year. We traded for him, but unfortunately, he's hurt. We're going to have to get him back at some point next year."
"I'm optimistic he's gonna be back," Girardi continued. "He's young and he's strong. But I can't tell you exactly when. I know that Dr. Ahmad said, what, 12 months? That's if things go right. Sometimes in rehabs you have little setbacks."
Cashman said he believed the injury took place on the final pitch of that outing, but acknowledged the possibility that a smaller, undetectable injury present in the shoulder was causing Pineda's earlier problems.
Pineda was flown to New York and given a dye-contrast MRI on Tuesday, which revealed the tear. But the Yankees did not reveal the finding because Cuza had requested Pineda get a second opinion from Altchek first.
The diagnosis was confirmed at that examination Wednesday.
Ahmad described himself as "cautiously optimistic" that Pineda will regain his ability after surgery, because Pineda's rotator cuff is undamaged, but he acknowledged that "shoulder surgery is challenging." The fact that the surgery will be performed arthroscopically rather than with an open incision also works in Pineda's favor, Ahmad said.
Pineda was 9-10 with a 3.74 ERA for the weak-hitting Mariners in his rookie season, but his effectiveness fell off markedly in the second half of the season, when his ERA rose and his velocity declined after the All-Star break.
Pineda came to training camp at 280 pounds, at least 10 pounds over his playing weight, and struggled all spring with his fastball velocity, which rarely was more than 91 mph and often languished in the high 80s.
"He didn't have his velocity from Day One, and we didn't know why," Cashman said. "This must have been responsible. Clearly, he was fighting through something."
But Cashman was careful to absolve the Mariners of blame.
"In no way do I believe, or do the New York Yankees believe, that the Seattle Mariners had any knowledge of any issues here with Michael Pineda prior to the trade or anything of that nature," he said. "He was a fully healthy player we acquired. We had full access to his medicals, which were clean. We had the opportunity to do a full physical exam, which we did, which came out clean. Michael has never had a shoulder issue nor has he complained of one with the Mariners, nor has he ever had any tests on the shoulder with the Mariners.
"This is just an unfortunate circumstance that can happen. It happened. Regardless of what happened, and I know he hasn't thrown a pitch for us, it's just timing is unfortunate. The Mariners obviously, there's nothing there. No further questions to pursue on that issue. (General manager) Jack (Zduriencik) and the Mariners, we got a healthy player to the best of everyone's knowledge as they conducted themselves."
Zduriencik told ESPNNewYork.com's Andrew Marchand the Mariners did not know Pineda was damaged goods, supporting Cashman's belief.
"Absolutely not," Zduriencik told Marchand. "None, whatsoever. Before the trade, he was going to be our No. 2 starter."
"I feel bad," Zduriencik continued. "We love Michael Pineda. He's a great kid. This is very unfortunate. I hope it works out. I'm surprised."
The Yankees revealed the extent of Pineda's injury on the same day that left-hander Andy Pettitte was making a start for Double-A Trenton in the next step of the 39-year-old pitcher's comeback from a one-year hiatus. Pettitte is still expected to make one or two more minor league starts after that.
Girardi said he felt the Yankees would be OK because he believes "our guys can pitch. That's the bottom line, guys just have to get it done."
As for Pettitte's eventual return, Girardi feels like so many others who assume that "Andy's going to be the Andy when he left."
Information from ESPNNewYork.com's Andrew Marchand and The Associated Press was used in this report.