The 34-year-old Ballack was expected to return in late October after fracturing his shinbone on September 11 in their 2-2 draw with Hanover 96.
"He will be out until the end of the year. That is the result of a medical test. He will need to wear a splint for four to six weeks to keep the pressure off the knee," Leverkusen said in a statement.
The Germany captain, who missed the World Cup and has not played for his country since injuring his ankle in the FA Cup final with Chelsea in May, joined his former club this season after a four-year spell in England.
"This development is very disappointing but I hope he can have a strong second half to the season after recovering from this setback," said Leverkusen coach Jupp Heynckes.
Ballack was not recalled for the first batch of Euro 2012 qualifiers due to a lack of match practice from his injury in May that kept him out for three months.
His fractured shinbone also sidelined him from Germany's Group A qualifiers against Turkey and Kazakhstan over the next week, hence putting his hopes of adding to his 98 international caps on hold.
