Smith sustained the injury Sunday while covering a punt in the Jets' 30-8 win over the Tennessee Titans. Right away, the Jets feared a significant injury, and it was confirmed Monday with an MRI exam.
Surgery hasn't been scheduled yet. The doctors will wait for the swelling to subside before repairing the ligament.
"It's a tough break for him," coach Todd Bowles said. "He was coming along, and he was starting to play faster. He was finding his place in the offense. But he's a young guy, and hopefully we can get it done and he can come back stronger next year."
Smith's season began with an injury. On the second day of training camp, the second-round pick suffered broken ribs and a partially punctured lung, costing him the entire preseason and the first two games of the regular season. Smith later missed another game with a foot injury.
He finished with nine receptions for 115 yards and one touchdown.
"It's unfortunate this happened," Bowles said. "He was coming around. He was really going to help us."
Smith struggled to learn the offense, but he saw significant playing time as the third or fourth wide receiver. The low point came Nov. 22 in Houston, where he dropped two passes -- including a long would-be touchdown pass from quarterback Ryan Fitzpatrick.
His season took an upswing the following week, when he caught a 16-yard touchdown in a win over the Miami Dolphins.
The Jets (8-5) could have a numbers issue at wide receiver as they prepare for the Dallas Cowboys this week. Jeremy Kerley's status is uncertain because of a bruised calf, leaving only four healthy receivers remaining. Bowles said they will explore the possibility of adding another to the roster.