Carter injured his knee in the second half of Purdue's loss to Nebraska on Sunday, as he planted his foot awkwardly and fell to the floor.
"We are obviously disappointed for Sterling and really feel for him," Purdue coach Matt Painter said in a statement. "It's very unfortunate to see his collegiate career end like this. Sterling gave all he had for the program this year and did everything we asked of him since his arrival last summer."
A fifth-year senior transfer from Seattle University, Carter had emerged into a starting role with the Boilermakers. His teammates regarded him as a leader in the locker room, even after just a short time in West Lafayette.
Carter averaged 4.8 points per game in 15.1 minutes as a Boilermaker. His top performance was a 19-point effort in Purdue's win over rival Indiana.