Coffey suffered the injury last week and after consulting with specialists was ruled out for the season by the Dream on Thursday.
Coffey, who has started in 31 games, was averaging 6.9 points and 4.8 rebounds in her seventh season.
Coffey was drafted out of Northwestern by the San Antonio Stars, now the Las Vegas Aces, in 2017. She was traded to Atlanta before the 2019 season and played for Phoenix and the Los Angeles Sparks before re-signing with the Dream before the 2022 season.
Coffey, 28, is expected to make a full recovery, according to the Dream.