The 26-year-old, who only joined the Blues this summer from Mansfield, picked up the injury that will require surgery in training last week.
Manager Lee Clark described the time out as a "hammer blow" for both the player and the club.
He told the club website: "[Green] has done his cruciate ligaments and will be out for the foreseeable future, he certainly won't come back this season.
"He is seeing a specialist, who will decide when he does have the operation and also, when he opens the knee up, discover if there is any other damage.
"So we have lost Matt for the rest of the season which is hammer blow to us but, more importantly, a hammer blow to the lad."
Green has scored twice in 12 appearances since signing a two-year deal at St Andrews.