The senior strong safety, who will have arthroscopic surgery early next week to repair the torn cartilage, will be out two to four weeks.
The 6-foot-1, 228-pounder had intercepted a pass during practice and tried to make a move on the runback when he tweaked his knee and went down.
"I feel really bad for the kid," said Trojans secondary coach Rocky Seto. "He just works so hard, but knowing him I wouldn't be surprised if he makes it back faster than expected."
Ellison has been an integral part of a USC defense that has been dominant for almost the entire season. The Trojans lead the nation in pass efficiency defense, total defense and scoring defense. They're also 10th against the run. In their last 14 quarters, they've allowed just 10 points.
The Trojans secondary has been considered a team strength with Ellison and Taylor Mays forming arguably the country's top safety tandem. However, Ellison is now the second starter in the defensive backfield that has gone down to injury. Last month, USC lost Shareece Wright to a neck injury which likely will sideline him for the rest of the season.
In 2005, Ellison had earned playing time as a freshman but had his season cut short after he tore ligaments and sustained a fracture in his left knee while making a key interception late in the Arizona State game. Ellison recovered to become the Trojans most consistent defender since then. He often has been overshadowed by the buzz around teammates Rey Maualuga, Brian Cushing and Mays, yet coaches have raved about Ellison, praising his understanding of the defense, his tackling ability and his leadership.
This season, Ellison had finally begun to get a lot more recognition for his play and was making a strong case for the Jim Thorpe Award, honoring the country's top defensive back.
Bruce Feldman is a senior writer with ESPN The Magazine. The Associated Press contributed to this report.