The Brazil international was forced off in the first half at Selhurst Park after appearing to overstretch while accidentally doing the splits.
Although he did not need the assistance of a stretcher, Jesus left the pitch in tears and City boss Pep Guardiola predicted after the match that the forward would likely be out for up to two months.
City have now confirmed Jesus did suffer ligament damage during the incident.
“Manchester City can confirm Gabriel Jesus suffered a medial collateral ligament injury during the 0-0 draw with Crystal Palace on Sunday,” a statement from the club reads.
“He will undergo further examinations in the coming days to establish the extent of his lay-off.
“We wish Gabriel a speedy recovery and we will keep you updated on his progress via the Club’s official channels.”
Jesus quickly came out on social media to calm fears of a lengthy absence, saying that the injury was “small” and that it would not require surgery.