The Real Madrid man sustained the problem during his country's chastening 4-0 Group G defeat to Germany in Salvador on Monday and scans have confirmed a grade two tear that will rule him out for the remainder of the tournament.
A statement on the Portuguese Football Federation's official website read: "According to the clinical and imaging severity, Fabio Coentrao is unfit for competition for a period exceeding the duration of the World Cup."
Portugal striker Hugo Almeida limped out of the first-half action with a thigh strain before half-time, while goalkeeper Rui Patricio is nursing a similar complaint.
The duo only sustained grade one injuries so are likely to resume their involvement in the World Cup, but they contribute to a worsening selection headache for coach Paulo Bento.
Coentrao's team-mate for club and country Pepe is expected to miss the rest of the group stage after picking up a red card for clashing with Germany's hat-trick hero Thomas Muller.
Portugal's next game is against the USA in Manaus on Sunday and they close the round-robin stage by taking on Ghana in Brasilia on June 26.
