Parsons left the game with under a minute left in the third quarter after falling to the ground trying to pursue Broncos quarterback Bo Nix off the edge.
He finished the game with two tackles and one pass deflection.
"(It) doesn't look good," said Packers head coach Matt LeFleur.
Parsons, who was acquired in a trade with the Dallas Cowboys before the start of the season, will now finish the year with 39 tackles, 12.5 sacks, and one forced fumble.
The veteran led the Packers in sacks and was the only one to have more than eight on the season. Now, the team will have to figure out how to compensate without their premier pass rusher, as their playoff push just got a lot more stressful.
In a close game, the Broncos closed things out as the Packers fell to the No. 7 seed in the NFC playoff picture despite still boasting a 9-4-1 record.
Packers QB Jordan Love finished the game with 305 total yards (276 passing) with one touchdown and two interceptions. Running back Josh Jacobs, who was questionable with an injury heading into the game, posted 92 yards (76 rushing) with two touchdowns (one rushing).
The Broncos improved their win streak to 11 games as they have sole possession of the No. 1 seed in the AFC with a 12-2 record.