Because he was injured, the Patriots first placed Matthews on injured reserve and then reached an injury settlement with the receiver that allows him to play again later this season, if healthy.
Matthews had signed a one-year, $1 million contract with $300,000 guaranteed ($170,000 pure guarantee, $130,000 workout bonus) with the Patriots in April, and he was vying for a roster spot at a position headlined by Julian Edelman and Chris Hogan. With Edelman set to serve a four-game suspension for violating the NFL's PED policy to open the season, some viewed that as possibly increasing Matthews' chances of sticking.
But a day after catching a touchdown pass from quarterback Tom Brady in Saturday's practice and being greeted by Brady with an embrace, Matthews' injury contributed to derailing those plans.
Matthews' injury also likely contributed to the Patriots' decision to bring in veteran free agent Eric Decker for a workout on Monday.
The Patriots have Edelman and Hogan atop their receiver depth chart, with Cordarrelle Patterson also projected to make the roster, primarily as a kickoff returner and gunner covering punts. How much Patterson chips in offensively remains to be seen, as the Patriots have had four-year veteran Phillip Dorsett taking quality repetitions in practice ahead of him, among others.
The Patriots also could turn to 10-year veteran Kenny Britt, but he has been sidelined early in camp with a hamstring injury, while third-year player Malcolm Mitchell's troublesome knee issue has kept him off the field.
Dorsett, who had been living next to Matthews and said he spoke with him Wednesday morning, noted the attrition at the position after Wednesday's practice.
"Guys are going to get nicked, it happens, and you just have to come out here with the mindset that you're going to practice as hard as you can," he said. "We're going to go out there and play as hard as we can with who we have on the field, and you can't really say much more than that."
Matthews had expressed excitement in the offseason about playing for the Patriots, after he spent the first three years of his career with the Philadelphia Eagles and last season with the Buffalo Bills. As a free agent, he had visited with the Green Bay Packers, Arizona Cardinals and Tennessee Titans; he said he chose New England because he viewed it as the best place for him to grow as a player and a man.
"I don't feel like I'm called to be comfortable, and I knew this would be a great place for me to go," he said at the time.
Matthews, 26, was limited to 10 games for the Bills last season after being acquired in an August trade from the Eagles.
He suffered a chip fracture in his sternum in his first practice of training camp for Buffalo and later fractured his thumb in Week 4, missing one game. He also missed one game in November because of a knee injury that later resulted in him being put on injured reserve.
Matthews finished the 2017 season with a career-low 25 catches for 282 yards and 1 touchdown.
In three seasons with Philadelphia, Matthews caught 225 passes for 2,673 yards and 19 touchdowns.
ESPN's Adam Schefter and Mike Rodak contributed to this report.