He will not need surgery, a source said.
MRI results also revealed that linebacker Bryan Thomas has a strained pectoral muscle. He is also day to day.
The Jets (6-7) have three games remaining and are one game back in the race for an AFC wild-card berth.
Hill sprained his knee in the second quarter of a 17-10 road win over the Jacksonville Jaguars. The 6-foot-4 rookie hurt the same knee against Arizona the week before and possibly sustained cartilage damage then, a source told ESPN.
The Jets did not specify the grade of Hill's sprain, meaning it could take anywhere up to six weeks for Hill to fully recover.
Hill is almost as well-known for drops as catches -- a drop late in the Patriots game Oct. 21 that likely would have been a touchdown precipitated a 29-26 overtime loss -- but the rookie has 21 catches this season for 252 yards and three touchdowns.
Hill's sprained knee further depletes a receivers group that has been affected by a number of injuries already. Tight end Dustin Keller has missed six games between his current ankle injury and a quad injury at the start of the season. Receiver Clyde Gates has missed two weeks with a concussion.
New York already has played most of the season without top wide receiver Santonio Holmes, who saw his season end with a Lisfranc injury suffered Sep. 30 against the San Francisco 49ers. Holmes will need additional surgery on his injured left foot in February.
ESPNNewYork.com's Rich Cimini contributed to this report.