The 27-year-old has had three surgeries on his left shoulder and appeared to be protecting it when he fell awkwardly during Australia's victory over New Zealand in the final of the trans-Tasman Twenty20 tri-series at Eden Park in Auckland.
He was immediately taken to hospital for preliminary scans. Lynn had further scans when he returned to Australia.
"Chris has undergone scans which confirmed some of the expected signs of a shoulder dislocation including bleeding in the joint along with some cartilage and ligament damage," Cricket Australia Sports Science Sports Medicine Manager Alex Kountouris said in a statement.
"After consultation with a specialist, at this stage we have confirmed that Chris does not need to undergo stabilisation surgery on his shoulder."
Lynn, who has impressed in the shorter formats of the game, was ruled out of the Pakistan Super League but had hoped to be fit for the Indian Premier League competition that runs from April 7 - May 27.
Kountouris said Lynn's participation in the IPL was a possibility.
"He will now undergo extensive rehabilitation to give us a better idea of how his shoulder will cope with return to normal function, with a view to being available to play in the IPL and the short-form series in the UK in June," Kountouris added.
"We will have a better understanding of how possible this will be in a few weeks, once we know how he is responding to the rehabilitation."
(Reporting by Greg Stutchbury in Wellington; Editing by Sudipto Ganguly)
