Coach Nate McMillan made the announcement before the start of Monday night's game against Washington.
McMillan said Collison suffered the injury during Saturday's victory over Philadelphia. A subsequent MRI showed he needed surgery, and McMillan says the Pacers hope to get Collison back shortly after the All-Star break.
Collison is averaging 12.8 points, 5.3 assists and 1.4 steals while shooting 43.2 percent on 3-pointers. Cory Joseph will replace Collison in the lineup.