The school later announced that Blackmon is expected to miss the rest of the season.
Blackmon, a 6-foot-4 guard from Marion, Indiana, was averaging 15.8 points and 4.2 rebounds this season, and shooting 46.3 percent from 3-point range. As a freshman, he averaged 15.7 points and 5.3 rebounds.
"This is a very tough outcome for our Indiana team, but most importantly for James," coach Tom Crean said in a release. "He is establishing himself as one of the most elite guards in the country this season. I feel terrible for him and he has a tough road ahead of him, but it is one he has been down before and we fully believe that this process will lead him to have an incredible future in the game at Indiana and well beyond. We look forward to helping him with his full recovery and I know he appreciates everyone's thoughts, prayers and concerns."
Blackmon had surgery last summer on his left knee, but he fully recovered.
Indiana (12-3, 2-0 in the Big Ten) hosts Wisconsin on Tuesday night.