The 19-year old Republic of Ireland international was hurt in a strong challenge by Bolton enforcer Fabrice Muamba in the 1-1 draw on the weekend and subsequent scans have shown extensive damage.
Latics boss Roberto Martinez said the tackle by Muamba was not required and although the news is better than initially feared, the Spaniard confirmed that the promising McCarthy would be sidelined for some time.
"It was an unnecessary challenge. It was not malicious, but it was reckless," he said.
"One of the most creative young players in the league is going to be out for up to 10 weeks. That is a football crime.
"He has been sensational. It is a little bit better than we thought at first, but it is obviously ligament damage in the right ankle.
"When it is swollen it is sometimes difficult to assess, but there is no fracture. Hopefully it will just be eight to 10 weeks.
"It (the injury) affected the players at half-time," he added. "They wanted to find out how he was and they were quite distressed in the dressing room.
"It was a negative note and it doesn't look good. It's a real shame as he's been maturing on the pitch."