James was fearful of being ruled out for longer after being forced off in the Blues' first game back after the World Cup, a tournament the right-back missed with the same knee injury.
Chelsea sent James for a scan on Wednesday, the morning after he was withdrawn less than an hour into a 2-0 win over Bournemouth.
A statement today read: "Defender Reece James underwent assessment earlier today after being substituted during the second half of last night’s 2-0 Premier League victory over AFC Bournemouth due to a knee injury.
"Scan results have regrettably confirmed a setback for the 23-year-old, with Reece now set to be ruled out for up to a month."
James confirmed the setback on social media, describing 2022 as his “toughest year to date.”
He posted: “Just wanna thank you all for the support, none of you go unnoticed. It’s naturally effected me mentally, I’m currently just tryna deal with the cards I’ve been dealt. (sic)
“I hope your end of year is filled with peace, joy & happiness.”