Coach Gary Kubiak said the injury will not require surgery. He expects Schaub to return to practice on Thursday and be ready when the Texans (4-5) play at the New York Jets (7-2) on Sunday.
"Everything should be OK," Kubiak said. "I expect him here tomorrow. If that's the case, and he's doing what he normally does, he'll be out there."
Schaub's agent, Joby Branion, would not comment on the quarterback's status.
Kubiak said he did not know how Schaub hurt his knee. He met with Schaub on Tuesday morning and said Schaub seemed fine. The quarterback left the Texans' training facility and called the team later in the day to say that his knee was bothering him.
He was hospitalized overnight, and Kubiak says the team wanted to keep him there Wednesday as a precaution.
"Just needed some rest, needed some treatment," Kubiak said. "We made a decision that it was best to get it there, then sit around here all day."
Schaub started every game last season and the first nine this year. He missed five games in 2007 with a shoulder injury and five more in 2008 with a strained ligament in his left knee.
Orlovsky started seven games for Detroit in 2008, when the Lions became the first team in NFL history to go 0-16. He hasn't taken a snap in a regular-season game since signing with the Texans in March 2009.
"My preparation won't be any different," Orlovsky said. "Who knows what's going to happen with Matt? I'll prepare the way I need to, and just go and run the offense. I'm not going to try to be Superman, I'll just try to go and run the offense and let those guys on the outside make the plays, put our team in good situations and give us a chance to win."
Receiver Andre Johnson first heard about Schaub's injury on Wednesday morning. He planned to call Schaub later in the day.
"I'm definitely concerned," Johnson said. "I was surprised to hear about it. I noticed he wasn't there in the meeting."
Orlovsky guided the first-team offense in practice for the first time on Wednesday.
"I understand the responsibility, I'm excited about it, if it comes to that," Orlovsky said. "It's only Wednesday. The guys in this locker room know that I prepare like I have to take the first snap on Sunday morning. That's not going to change. If needed, I'll be ready to go."