The 22-year-old's hopes of an England breakthrough will have to be put on hold after suffering the knee injury in training, but Chalobah is expected to be fit before the end of the calendar year.
The midfielder, who earned his first call up to the senior England squad last month after his £5m move from Chelsea in the summer, is now on crutches with his knee in a brace.
Watford performance director, Gavin Beniafield said: "Whilst we can't put an exact timeline on his recovery, we are expecting to see him re-integrating into the squad well before the new year."
Chalobah, who missed the Hornets' 2-1 win over Swansea on Saturday, had started every league game previously and enjoyed a positive start to the season, so Watford fans will hope he is not sidelined for too long.
The former U21 international was named in Southgate's squad for the previous World Cup qualifiers in August and although he did not make his England debut, he was expected to be picked again when the manager names his squad for the upcoming qualifiers against Slovenia and Lithuania on Thursday.