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.
Hoje fiz um exame no joelho esquerdo que diagnosticou uma pequena lesão no ligamento colateral medial! Graças a Deus não é uma lesão muito séria e não preciso passar por nenhum procedimento cirúrgico. Volto o mais rápido possivel! Obrigado por todas as mensagens de apoio e pensamento positivo! Feliz ano novo! 2018 promete!!! ——————— Today I went through an image exam on my left knee that diagnosed a small medial colateral ligament injury! Thanks god it is not very bad and I won’t have to go through any surgery procedure. Promise to be back as soon as possible! Thanks for all the fans support and positive thoughts! Happy new year! 2018 is going to be my year!
"Today I went through an image exam on my left knee that diagnosed a small medial collateral ligament injury!" he wrote on his official Instagram account.
"Thanks god it is not very bad and I won't have to go through any surgery procedure. Promise to be back as soon as possible!
"Thanks for all the fans support and positive thoughts! Happy new year! 2018 is going to be my year!"
Following the injury to Jesus and midfielder Kevin de Bruyne taking a knock on a late challenge in the same match, Manchester City boss Pep Guardiola asked for more protection for players .