MRI test results on Friday showed that Schmidt (29) had damage to his UCL.
The Yankees and Schmidt are seeking a second opinion, but the club ultimately believes that his season is over.
Schmidt, who received the same surgery in 2017 while in college, also missed nearly four months due to a right lat strain last year.
In 14 starts this season after missing even more time to start the year due to rotator cuff tendinitis, the righty posted a 3.32 earned run average while striking out 73 batters in 78.2 innings.
The injuries woes continue for the six-year Yankees veteran. New York's injury bug is biting hard this year after ace Gerrit Cole was ruled out for the year while reigning American League Rookie of the Year, Luis Gil, is still on the road to recovery, possibly making his first rehab start in the coming month or so.
The Yankees' starting rotation has shockingly been solid without two of their biggest arms, posting a 3.67 ERA heading into Sunday - same squad that is fourth in the league in total strikeouts (354).
However, the Yankees (48-41) have recently found themselves losing their spot atop the American League East division, falling now three games behind a scorching hot Toronto Blue Jays team that's now 51-36.