Sanchez's knee will be immobilized over the weekend and he will start rehab on Monday, USC sports information said in a release. He is listed as day-to-day.
Sanchez's father Nick told ESPN's Shelley Smith on Saturday that Mark joked he was going to practice the day after the injury, but the news was the best they could have expected.
There was no structural damage, and Nick said Mark's kneecap is very sore. Nick said his son could be out one to four weeks, depending on how he responds to treatment.
Sanchez sat in a golf cart, with his injured leg elevated, and watched the Trojans' morning workout Saturday, according to the Los Angeles Times.
"They put it back in [on the field]," USC coach Pete Carroll said Friday of Sanchez's kneecap. "There are no other complications. It's a day-to-day deal. We'll wait and see. He's real encouraged and the doctors are, too.
"On the other side of this, it's an extraordinary opportunity for the other quarterbacks to jump in and fight for the job."
Sanchez collapsed to the ground in obvious pain before the Trojans began stretching drills.
Sanchez's injury came as he jumped slightly while tossing a warm-up pass. He was later wheeled off the field before undergoing X-rays.
"I landed awkwardly when throwing," Sanchez said. "[The dislocation] is pretty clean. Nothing torn and no cartilage problems. It's the best case scenario.
"I feel good about the other guys being able to fill in. It'll be a seamless transition. They'll do well.
"It was scary, frightening at first. The way they say these things happen, it could be a lot worse. It just hurt a lot when it happened, but it feels better now."
With starter John David Booty injured last season, Sanchez played seven games and started three, completing 60.5 percent of his passes (69 of 114) for 695 yards. He threw seven touchdowns with five interceptions.
Mustain transferred from the Razorbacks after the 2006 season amid controversy surrounding Ole Miss coach Houston Nutt, who resigned from Arkansas after the 2007 season.
The Trojans were ranked second in last week's USA Today preseason coaching poll behind the Georgia Bulldogs.
Information from ESPN.com college football writer Joe Schad was used in this report.