The forward, who was injured in a 5-4 shootout win against the Montreal Canadiens on Feb. 23, will have surgery to repair a damaged labrum after dislocating his left shoulder.
Senators general manager Pierre Dorion said Stepan is expected to recover in time for next season.
"Derek was coming into his own," Ottawa coach D.J. Smith said. "It wasn't fair to him, the (COVID-19) quarantine and no exhibition [games], and I really thought he was coming into his own. He was doing a nice job with that line (with Tim Stutzle and Drake Batherson), just showing them how hard you have to play away from the puck. And a guy that's played a lot of games and he did what we brought him in to do. It's just unfortunate, injuries happen."
Stepan, who was acquired by Ottawa in a trade with the Arizona Coyotes on Dec. 26, 2020, scored six points (one goal, five assists) in 20 games. He is in the final season of a five-year contract he signed with the New York Rangers on July 27, 2015 and can become an unrestricted free agent after the season.
"It's tough. He's a great guy," Ottawa forward Connor Brown said. "I got to know him pretty well in the short stint, as we all did. He's a character, a good player, good leader. We're going to miss him big time."
The Senators lost 3-1 at the Canadiens on Tuesday.
NHL.com independent correspondent Sean Farrell contributed to this report
