Williamson limped off early in the Gunners' 1-0 defeat to Manchester United in the Women's Super League on Wednesday.
"We can confirm that Leah Williamson suffered a ruptured anterior cruciate ligament," Arsenal said in a statement.
"Leah will now begin a period of rehabilitation and is set for an extended spell on the sidelines. She will undergo surgery in due course."
Williamson will also be absent for Arsenal's Champions League semi-final tie against Wolfsburg.
"Until I have the words to express my feelings properly I will struggle to verbalise them. The noise around the situation is loud and I need some quiet to let it all sink in," Williamson posted on Instagram.
"Unfortunately the World Cup and Champions League dream is over for me and everyone will think that's the main focus, but it's the day to day of what I'm about to go through that is the most draining of my thoughts."
Williamson led the Lionesses to win their first major tournament at Euro 2022 on home soil last year.
"We're with you every step of the way," the Lionesses Twitter feed posted in response to the news.
The loss of the defender is a major blow to England's chances of backing up that success by lifting the Women's World Cup for the first time in Australia and New Zealand.
Sarina Wiegman will also be without Arsenal forward Beth Mead, who won the Golden Boot at Euro 2022, for the World Cup after she too suffered an ACL injury rupture back in November.
England kick off their campaign against Haiti on July 22nd before facing Denmark and China in Group D.
Williamson collapsed in pain in the 12th minute of the 1-0 loss at Leigh Sports Village after appearing to catch her studs in the turf before limping off.
She is the third key Arsenal player along with Mead and Vivianne Miedema to rupture cruciate ligaments this season, and Gunners boss Jonas Eidevall has criticised the quality of playing surfaces in the WSL.
"I think it's going to continue here with the schedule we have and pitches like that, players are going to get injured," said the Swede.
"That is something that we all need to improve on, the facilities where we play, so we can keep the players on the pitch."
