The 21-year-old has been ruled out of both legs which leaves Brendan Rodgers with a striker crisis at the club.
The Italian was due to play Sweden on Friday in the Under-21 Championships but an MRI scan revealed the injury.
It also leaves Liverpool with a striker crisis, with Luis Suarez the team's only recognizable striker.
Manager Brendan Rodgers will now be relying on youngsters such as Adam Morgan and Samed Yesil to step up to the fore during Borini's rehabilitation.
It also leaves Italy's Under-21 manager Devis Mangia with a headache as he now has to patch up his side as it goes into a double-header with the Swedes. The return fixture is next week. Whoever wins books their place in the 2013 European Championship in Israel.
At his disposal now are strikers Giuseppe De Luca of Atalanta, Manolo Gabbiadini of Bologna, Ciro Immobile of Genoa and Samuele Longo of Espanyol.
The injury comes days after Borini called for 'the utmost concentration' over both legs as the Under-21 side beat Belarus 2-0 in the first leg, only to beaten 3-0 in the return fixture in 2010.