The Bora-Hansgrohe rider crashed at high-speed during the 159.7 km stage from Vitoria Gasteiz to Villanueva de Valdegovia.
McCarthy was part of the peloton as they chased a breakaway on a plateau between the stage's two ascents of the Puerto de Orduna when the Aussie rider was shown by cameras in on the ground in a farmers field.
The 28-year-old was quickly attended to by medics and his Bora-Hansgrohe team car before being transported to hospital by an ambulance.
A Bora-Hansgrohe release announced McCarthy had been cleared of any serious neck or spinal injuries.
"He has suffered a severe distortion of the knee, which leads us to assume a complicated ligament injury of the right knee joint. An evaluation of the imaging is still pending at this time," the team said.