Chandler will have an MRI on Thursday to determine the exact extent of the injury.
He left the locker room on crutches but is optimistic he'll be ready for the season opener next Thursday.
"I'm sure I'll stay off it the next couple of days and then pick up work with my teammates leading into the first game of the season," Chandler said.
Chandler collided with Brooklyn forward Gerald Wallace while setting a screen in the first quarter and appeared to be in significant pain. He stayed on the ground clutching his knee and was tended to by a Knicks trainer before heading back to the locker room.
Afterward, he said he "turned" his knee.
"It was awkward," Chandler said. "My foot was planted when he fell into me. It just torqued my knee outside a little bit. I kind of didn't feel it until I started laying there."
The team originally said Chandler's injury was minor and he was held out of the game as a precaution.
The Knicks will be off Thursday and then will begin a series of intrasquad scrimmages Friday.
If Chandler's out for an extended period, it leaves a huge void for New York on the defensive end. Chandler, the reigning defensive player of the year, helped transform the Knicks into a top-10 defensive team last season, his first in New York.
Chandler's injury further depletes a Knicks front line that is missing Marcus Camby (calf) and Amare Stoudemire (knee). Rasheed Wallace is not yet in playing shape. The only healthy option the Knicks have at center is reserve Kurt Thomas.
Guard/forward James White also left Wednesday's game in the third quarter with a sore left foot. He appeared to be hobbled in the locker room but later wrote on Twitter that he'd be ready for the Knicks' season opener.
Chandler's injury is the latest in a long line for the Knicks this preseason.
J.R. Smith has sat out the past four preseason games with an Achillies injury, but the Knicks are optimistic he will practice Friday. Stoudemire is expected to miss two more weeks because of a ruptured cyst in his left knee. Coach Mike Woodson has said that Wallace will begin scrimmaging Friday.
The Knicks have the oldest roster in the NBA, with an average age of 31, so health is a concern entering the season.
Woodson admitted he was uneasy over his team's injury situation.
"I'm not one who's going to sit here and panic and complain. It's what it is right now," Woodson said. "It's a long season. Whoever's in uniform, that's who I'm going to go out and win with."
Ian Begley is a regular contributor to ESPNNewYork.com.