The Spaniard's reign as champion at Melbourne Park ended prematurely in the second round with defeat by American Mackenzie McDonald.
Nadal pulled up suddenly late in the second set and clutched at his left hip. He opted to finish the match after an off-court medical timeout but his movement was severely hampered.
The 36-year-old underwent a scan in Melbourne on Thursday morning that showed a grade two tear of his iliopsoas muscle.
An update from Nadal's team said he would return to Spain for a period of rest and treatment, with the normal recovery time for the injury from six to eight weeks.
If that timeframe proves correct, Nadal could also miss the BNP Paribas Open in Indian Wells at the start of March but should be recovered in time for his favourite European clay-court swing.
He cut a disconsolate figure following the match as he contemplated another period on the sidelines but the good news is it is not a more serious injury.
Speaking on Wednesday, Nadal said: "If I have to spend a long time again, then it's super difficult in the end to be in rhythm and to be competitive and to be ready to fight for the things that I really want to fight for. Let's see how the injury is, and then let's see how I can manage to follow the calendar."