The 24-year-old was stretchered from the field at the Emirates on Saturday in the latter stages of Arsenal's 2-0 victory over north London rivals Tottenham Hotspur in the FA Cup.
Gunners boss Arsene Wenger was hoping the injury to Walcott would not be too serious but scans have revealed the Three Lions star has suffered damage to his anterior cruciate ligament.
Walcott is now set to go under the knife to resolve the problem but the early prognosis is that the former Southampton starlet will be out of action for at least six months, which rules the player out of the World Cup in Brazil this summer.
A statement on the Arsenal website read: "Theo will have surgery in London in the near future and is expected to be out for at least six months, therefore missing the remainder of the season and the World Cup in Brazil in the summer.
"Everyone at Arsenal wishes Theo a speedy recovery and we look forward to seeing him back on a football pitch as soon as possible."