The 23-year-old visited a specialist on Tuesday after being forced off half an hour into Sunday's 1-0 home defeat to Birmingham, with scans indicating he will have to go under the knife.
McCarthy told the club's official website: "He's had a scan and it looks like he'll need an operation, which would be six to eight weeks out."
The news comes as a blow to Wolves, with Kightly impressing of late after a troubled start to the campaign following hip and foot surgery, but McCarthy accepts the prognosis is not as bad as it could have been.
"The way he went over and rolled his ankle, apparently he's quite lucky and it could have been worse," he said. "We've not really had Michael at his full potential yet and Sunday was the first time we'd maybe seen that and then he picks up a new injury.
"It's really disappointing for him because he wants to play and he thought he was somewhere at it. He was really down about it all yesterday but today he's brightened up because it looks like being six to eight weeks. That's almost good news in terms of what could have happened."