A hard tackle from Tyrell Malacia in Friday's 3-1 defeat to Manchester United in the FA Cup saw Iwobi taken off on a stretcher in the second half.
Iwobi has been an ever-present for Everton across all competitions this season, playing 21 times while scoring one goal and providing five assists.
He has been one of Everton's better performers in a difficult campaign which sees the Toffees once again battling to retain their Premier League status.
Frank Lampard's side are currently 18th on the Premier League standings.
A club statement providing an update on the Nigeria international's current condition read: "Alex Iwobi is expected to be out for around three weeks with the ankle ligament injury sustained against Manchester United on Friday."
"The Everton midfielder was taken off on a stretcher early in the second half of the FA Cup tie at Old Trafford. Scan results on Saturday confirmed a lateral ligament injury that will be managed conservatively by the Club’s medical team at Finch Farm."
The 26-year-old is expected to miss upcoming matches against Southampton, West Ham United and former club Arsenal.
