Gujarat Titans' Williamson was fielding near the boundary when he tried to stop a six in their match against the Chennai Super Kings on Friday. He landed awkwardly on his right leg and fell to the ground in pain clutching his knee.
Williamson had to be helped off the field as the Titans brought on Sai Sudharsan (21) as an impact substitute, a new rule the IPL brought in this year which allowed the Indian to bat instead of Williamson during the run chase.
Stead said it was "too early to know" whether Williamson had done significant damage to his knee that would rule him out of the 50-over World Cup to be held in India from October this year.
"Our first thoughts are obviously with him, we're not sure at this stage of the severity of the injury. He's being assessed in the next 24-48 hours, so we will know more after that," Stead said before New Zealand's Twenty20 series against Sri Lanka.
"All we know at this stage is it's his right knee.
"It's not nice to see anyone, let alone your captain of your white ball team, being injured. It's a big blow for him and it's a big blow for us."
Williamson, who previously played for and also captained Sunrisers Hyderabad, was making his debut for the reigning champions.
Gujarat won the match by five wickets with four balls to spare after Chennai posted 178-7 in 20 overs.