Cleary was officially withdrawn from the tournament on Wednesday, with Cronulla half Nicho Hynes to replace him the Kangaroos' 21-man squad.
Cleary's injury will mean Manly and Queensland star Daly Cherry-Evans will likely regain his role as Australia's halfback, after losing the spot during last year's World Cup.
The Penrith No.7 was hurt when he was the victim of a Payne Haas hip-drop tackle in the early stages of the Panthers' 26-24 grand final win.
He received treatment on his knee following the tackle and did not take the conversion kick for Penrith's first try.
Cleary was, however, able to recover to pull off the greatest comeback in grand final history and win the Clive Churchill Medal for his efforts.
Panthers officials had been unable to properly assess the 25-year-old until Wednesday, ahead of the club's awards night.
There is no suspicion of long-term or ACL damage.
Cleary's withdrawal from the tournament means both he and fellow Penrith playmaker Jarome Luai will have an extended off-season break for the first time since the end of 2019.
Luai has already been ruled out of Samoa's campaign with a shoulder injury, as the Panthers wait to determine if he requires surgery.
Hynes had earlier conceded he was next to no chance of representing Australia this year, after being dropped by NSW following a 12-minute State of Origin debut off the bench in Game I this year.
"I don't think I'll be selected this year," Hynes said last month.
"I can play fullback or in the halves but what happened in Origin probably didn't help me put my best foot forward.
"I would love to wear the green and gold, that's something that I dream about."
Australia face Samoa in the tournament opener on October 14 in Townsville, before a clash with New Zealand on October 28 in Melbourne and the final in Hamilton on November 4.
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