- Brett Okamoto
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The bout had been scheduled as the co-main event at UFC 135 on Sept. 24 in Denver.
UFC president Dana White announced the news via Twitter Monday.
"Diego Sanchez broke his hand," wrote White. "Looking for a replacement for Hughes."
Hughes (45-8) now awaits a new opponent. The 37-year-old hasn't fought since last November, when he suffered a first-round knockout loss to B.J. Penn at UFC 123. The loss snapped a three-fight win streak.
Sanchez (23-4) has fought once in 2011, a unanimous decision win over Martin Kampmann at UFC on Versus 3 in March. He's 2-1 since moving to the welterweight division last year, after suffering a one-sided TKO loss to then-lightweight champion Penn in December 2009.
There has been no indication as to how Sanchez will be sidelined by the injury.
Brett Okamoto covers mixed martial arts for ESPN.com.
A broken hand has forced UFC welterweight Diego Sanchez to withdraw from a high-profile fight against Matt Hughes later this month.