The All Black underwent an MRI scan, revealing a grade two MCL injury, and is currently in a knee brace.
Naholo will miss up to six weeks.
No replacement in the squad has been named as the Highlanders prepare for their next Super Rugby game, against the Hurricanes on Friday.
The injury comes as a blow to not only the Highlanders but also Naholo's chances of being pushing for World Cup selection later this year.
He's been struggling to regain top form in 2019 and the 26 Test wing is under serious pressure from the likes of George Bridge for a spot.