The American, 31, suffered the injury on Saturday while competing in Andorra.
Vonn continued to race in a knee brace the following day, setting the fastest time in the super-G leg and finishing 13th in the combined event to extended her overall lead to 28 points.
But scans have revealed she suffered three fractures to her tibial plateau, meaning she can no longer compete.
Vonn, a 2010 Olympic gold medallist, set a new record for women's World Cup downhill victories in January and has won 76 World Cup races in total.
Four-time World Cup champion Vonn said in a statement: "Because I am currently leading the overall World Cup standings, this is one of the toughest decisions of my career."
"Further damage to any of the fragments could result in a serious surgery that would risk my future in ski racing.
"With the World Championships in St Moritz next year and the Winter Olympics in South Korea the following year, I cannot take that risk."
Alpine skiing World Cup leader Lindsey Vonn will miss the rest of the season after fracturing her leg.