The move, announced before the finale of Cincinnati's four-game series against the San Francisco Giants, is retroactive to Wednesday. The Reds recalled infielder Max Schrock from Triple-A Louisville to replace Moustakas on the 26-man roster.
Moustakas has been hampered by the injury since last weekend's series in Colorado and has not been in Cincinnati's lineup for the past six games, although he appeared as a pinch hitter this week against the Giants.
Reds manager David Bell told reporters that he had hoped Moustakas would return Thursday but that a recent exam revealed "more damage" in the slugger's heal.
"I was surprised," Bell said, according to MLB.com. "I was positive based on the feedback I was getting from [Moustakas]. I think he just wanted to play so bad. I know he was doing everything he possibly could to get back on the field, to get back in the lineup. But even from Day 1 or Day 2, he made himself available to pinch-hit.
"Every day I would talk to him, he was getting better. [It was] definitely a concern that, by putting him in the games, that I was making it worse. I kept asking that, and he said, 'No.' Finally, they just did another exam and found a little more damage in there."
Moustakas, 32, is batting .241 with four home runs and 13 RBIs this season, his second with the Reds.