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The Germany midfielder fractured his shinbone in a Bundesliga match against Hanover last month but his injury turned out to be worse than first thought.
"He will be out until the end of the year. That is the result of a medical test," Leverkusen said in a statement.
"He will need to wear a splint for four to six weeks to keep the pressure off the knee."
Ballack joined Leverkusen in the close season after his contract with English champions Chelsea expired.
He missed the World Cup finals in South Africa, where his side finished third, due to an ankle injury he picked up in the FA Cup final with Chelsea.