The Saracens ace damaged the ligaments in his knee during the Red Rose's 27-14 win over Argentina at Twickenham on Saturday afternoon and underwent surgery earlier today.
Vunipola will now miss at least the next three months of action as he makes a recovery, meaning one of England's key men - nominated for the World Rugby Player of the Year accolade - will watch next year's annual Six Nations from the sidelines.
Despite the big loss, head coach Eddie Jones is remaining upbeat and says that it offers a chance for someone else to stake a claim for a regular starting spot.
"Billy's been absolutely fantastic for England over the last 11 months and we wish him a quick recovery," he is quoted as saying by Sky Sports News.
"He's a very influential player in the set-up and there's no doubt he'll be missed for the game against Australia. But where there is an injury, there's an opportunity for someone else.
"We've had five or six frontline players missing throughout the series, so I've no doubt we'll adapt and work that little bit harder this week. I'm sure the players will respond to this by going up a level and peak for this game."
England's triumph over Argentina took their winning run to 12 matches, with just one more game - against Australia next weekend - left to come this year.