Power centre Manu Tuilagi, a key to England's 2012 victory over the All Blacks at Twickenham, damaged anterior cruciate ligaments when Leicester were beaten by Saracens in the English premiership.
Injuries and controversy have dogged Tuilagi's career since his outstanding performance against New Zealand four years ago, but he would have been a central element to Lions' coach Warren Gatland's planning for the tour in June and July.
The latest knee injury will sideline him for six months. The 25-year-old has had severe groin trouble over the last two years and only managed one replacement appearance for England in 2016.
Leicester head coach Aaron Mauger said: "It's devastating for him. He is absolutely gutted. He's got himself into such a good position, I think he's really matured as a person over the last 12 months and that's probably helped him get back to the space that he's been in."
Tuilagi looked in severe pain after being tackled early in the premiership match and was assisted off the field.