The Milan midfielder was taken from the field on a stretcher after a challenge with Alex Pearce in the eighth minute of the 0-0 friendly draw on Saturday.
And after the match Italy team doctor Enrico Castellacci confirmed to Rai Sport the extent of the problem, which will end Montolivo's hopes of making the finals in Brazil.
The 29-year-old was immediately taken to hospital and will now undergo further tests.
"Montolivo has what we suspected," Castellacci said. "(He) has a fracture of the tibia.
"I have not seen the X-ray to assess the severity, but more or less every tibia fracture needs surgery.
"There will be no World Cup for Montolivo."
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