The 27-year-old Spaniard, who only returned to action for Nuno Espirito Santo's side in early February, has seriously injured his right knee – the same one as he did last August.
The injury occurred during training at Compton on Sunday while preparing for tonight's game against West Ham at Molineux.
A devastating blow, Otto will have to undergo surgery on both his ACL – for the second time in just eight months – and MCL ahead of a long road of rehabilitation.
Wolves confirmed his injury in a club statement, while also revealing Joao Moutinho (groin) and Willy Boly (Covid positive) will miss the clash with the Hammers.
The statement read: "Jonny suffered a reinjury to his right knee in training on Sunday.
"He will need surgery to the MCL and again to the ACL. It is awful news for him. He will see a specialist in London this week.
"Joao Moutinho suffered a groin injury on international duty, in the first-half of the first match Portugal played. He is making a good recovery but is not yet available.
"Willy Boly has tested positive for Covid-19 and is self-isolating in line with government guidance."
Otto's original injury happened against Olympiacos in the last 16 of the Europa League last year and following a successful operation, he spent six months recovering.
His first game back was against Leicester on February 7, and he had made seven Premier League appearances in 2020/21 before this setback, which will rule him out for the rest of the season and beyond.
Otto was snapped up from Atletico Madrid for £15m in January 2019 after an impressive loan spell and recently penned a new long-term contract until 2025.
He has played 95 times for the club in total, scoring three goals.