The team announced in a statement that Williams dislocated his right patella and tore the medial collateral ligament (MCL) in his right knee.
Williams suffered the injury when he attempted to set up a pass block and fell to the ground in pain, per the team's official website.
According to NFL Network Insider Ian Rapoport, Williams' injury is not considered to by season-ending.
Williams started 16 games for the Panthers in 2017. A fourth-round pick out of Oklahoma, the 25-year-old has grown into one of the better offensive tackles in the NFL, earning second-team All-Pro honors last season.
Entering the final year of his rookie contract, Williams was slated to command top dollar. Rapoport reported the Panthers and Williams had preliminary contract talks this spring but couldn't bridge the financial gap. A devastating injury could change his financial outlook.
Williams' injury is another setback for the Panthers' offensive line. Cam Newton's line already lost guard Andrew Norwell in free agency this offseason. With Williams out for an extended period of time, the team could consider 2017 second-rounder Taylor Morton or veteran Jeremiah Sirles as stand-ins. Either would be a major downgrade.