Coach Tom Crean said Tuesday that Taber injured the knee last week.
Neither the nature of Taber's injury nor which knee was injured was disclosed.
The 6-foot-7 Taber started four games last season, averaging 1.3 points and 2.5 rebounds in 22 games. He is the only returning scholarship player for the Hoosiers, who are still awaiting possible sanctions by the NCAA for telephone recruiting violations by former coach Kelvin Sampson.
"This is very unfortunate for Kyle," Crean said. "He has been a strong presence and has done things the right way for us since we arrived here. We will move forward and help him through his rehabilitation and look to him to provide us with the leadership that is expected from a fifth-year senior at Indiana."