The 26-year-old fell awkwardly early in the title-decider won by New Zealand and took no further part in the match.
Scans showed Douglas had ruptured an anterior cruciate ligament in his left knee, the Australian Rugby Union said in a statement on Thursday.
The ARU said Douglas, who played every match of the tournament, would have surgery this week and continue his rehabilitation with his Super Rugby side Queensland Reds.
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The Reds play their first regular season game on Feb. 27 with Douglas highly unlikely to be fit in time.
(Reporting by Ian Ransom; Editing by Patrick Johnston)
