The Eagles defender, a veteran of 113 games, went down in pain in the second quarter of their rampant 96-point elimination final win over North Melbourne at Patersons Stadium on Sunday.
Waters was escorted off the ground by trainers and later substituted, and the Eagles have confirmed the 26-year-old will be sidelined for 8-10 weeks, after scans showed a separation of the sesamoid bones in his foot and ligament damage in his big toe.
A story on the club's official website said Waters' omission for the remainder of the Eagles' season opens the door for midfielder Matt Rosa to make his way back into the 22.
"While Waters is out for the rest of the year another inspirational leader, Matt Rosa could play this week, just three weeks after breaking his collarbone," the story read.
"Rosa, who was returning from a broken jaw, ran back with the flight of the ball against Collingwood in round 22 and suffered a fractured collarbone.
"He made a brave bid for inclusion in the elimination final against the Roos and will step up his bid for selection in Saturday night's cut-throat final against Collingwood."