Yahoo Sports' Shams Charania reported Butler has a meniscus tear.
Charania added Butler is expected to miss four-to-six weeks after undergoing surgery on his knee, but a final timetable will be determined after the procedure.
K.C. Johnson of the Chicago Tribune reported Butler hopes to be back in time for the playoffs.
Butler suffered the injury in the third quarter of Friday's 120-102 loss to the Houston Rockets at Toyota Center.
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Butler, 28, is averaging a team-high 22.2 points to go with 5.4 rebounds, 5.0 assists and 1.9 steals through 56 games this season.
So long as he's sidelined, the Timberwolves will need to lean even more on Karl-Anthony Towns, Andrew Wiggins and Jeff Teague to keep the starting five afloat.
Jamal Crawford should also shoulder a heavier workload as Minnesota's volume-scoring sixth man.