Dagg, who plays full-back for the Crusaders and Hawke's Bay, ruptured a tendon in his right thigh while attempting a clearance kick against the Stormers on May 8.
He underwent surgery on Monday and is understood to be out of all rugby for three months, ending his Super Rugby season.
The All Blacks' final Bledisloe Cup and Tri Nations Test against Australia in Brisbane on August 27 is expected to coincide with the naming of the 30-man World Cup squad.
Picking Dagg at that point, over many other outside back options, would be a gamble by All Blacks coaches Graham Henry, Wayne Smith and Steve Hansen.
With ability to cover wing and full-back equally well, Dagg was a near-World Cup certainty and his injury opens the door for fellow World Cup hopefuls, among them Cory Jane, Hosea Gear, Ben Smith, Sitiveni Sivivatu and Rene Ranger.
Gilbert has released a new line of rugby cleats. The Gilbert Virtuo 8S is part of the exciting new product. Check it out.
The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
The Nike Tiempo is a solid rugby cleat and one of few styles still made from full-grain natural leather.
The Gilbert Blitz 8S rugby cleat is a great cleat at a great price of $69.99. Get a new pair of cleats today.
A cool looking all black rugby cleat with the high performance adidas is known for. Get in the Gear!
Wear the crest of the British and Irish Lions on your t-shirt. A great look for the summer.
The All Blacks Performance t-shirt is black with hints of blue from the training jersey. Very Cool.
The New Zealand All Blacks training jersey for 2013/14. Get in the Gear!
The USA Rugby Pro Alternate rugby jersey is perfect for any fan of the Eagles. Get yours to wear during the summer Test matches.
The NEW All Blacks 2013/14 jersey has arrived at World Rugby Shop. Dare to wear the colors of the All Blacks.