Daniels, the Ravens' second-leading receiver, hadn't practiced all week. The news was surprising, though, because it came one day after offensive coordinator Gary Kubiak said Daniels was fine.
"As the week went on, his knee was not really progressing the way we wanted it to," Harbaugh said.
Harbaugh declared Daniels out for Sunday's first-place showdown against the Cincinnati Bengals.
"After that, he has a chance to come back," Harbaugh said. "So, it'll be week to week after that and it won't be many weeks at all. It could actually be next week. That's an optimistic approach, but it could happen."
The Ravens will start their third tight end, and it's only the eighth game of the season. Dennis Pitta went down with a season-ending hip injury in Week 3.
Rookie third-round pick Crockett Gillmore is expected to replace Daniels. He is known more as a blocking tight end, but the Ravens have been impressed with his progression as a receiver. In his last two games, Gillmore has three catches for 29 yards.
"I've prepared to be the guy from the first day I was here, following Owen and Dennis around," Gillmore said. "They've given me a great opportunity to step into their shoes."
Monroe and Osemele are expected to return for Sunday's game after practicing all week.