The results of Wednesday's scan revealed the Scotland international has suffered medial ligament damage and bruising to the bone in his right knee, although both he and boss Mick McCarthy are optimistic it will not keep him sidelined for the long-term.
Iwelumo sustained the injury during Monday night's promotion showdown against Birmingham when on the end of a crude challenge from Lee Carsley, which resulted in the midfielder seeing red and the Wolves marksman being stretchered from the field.
McCarthy told the club's official website: "It's not as bad as we thought it would be but he still has medial ligament damage and bruising to the bone.
"But it's a lot better than we thought. He's been doing some stuff in the pool and walking, but we haven't got any time of his recovery.
"He's obviously out for this weekend but he is fairly optimistic actually. There's not long (of the season) to go if he's damaged his medial ligament so I guess we'll just give the knee a chance to settle down."