The 6-foot-3 junior from Knoxville, Tenn., was injured while driving for a layup in the first half of the Bulldogs' 78-58 victory against Florida Atlantic on Tuesday night.
Steele scored a team-high 16 points in the team's season-opening loss against Troy. He had two points against Florida Atlantic before his injury.
The school says surgery will not be required.
Mississippi State (1-1) also announced that forward Colin Borchert has been suspended for a "violation of team rules" and will not travel with the team to the Maui Invitational this week. The Bulldogs will take just six scholarship players to Maui.
Borchert is averaging 5.0 points and 3.5 rebounds.