The holding midfielder, who was an integral part of the England team that won the Euros last year, crumpled to the turf at Sydney Football Stadium without contact in the 38th minute and immediately called for medical assistance.
England, who beat Haiti 1-0 in their tournament opener, went on to beat the Danes 1-0 courtesy of Lauren James's sixth minute strike to put one foot in the last 16.
The injury to Walsh was, though, a dark cloud over the victory for a team who lost captain Leah Williamson and Euro 2022 Golden Boot winner Beth Mead to anterior cruciate ligament (ACL) injuries before the tournament.
"Of course I'm concerned because she couldn't walk off the pitch but ... we can't make any assumptions until we have a diagnosis," England coach Sarina Wiegman told reporters.
"It's not nice when a player goes off the pitch like that but we know that sometimes, unfortunately, these things happen in football. You have to find your feet and get on with the game and that's what we did.
"In the second half, (Denmark) played a more direct style and it was more of a fight game, and we also showed that we can fight. I felt they showed real resilience and ... I'm really proud of the team."
Walsh, who left the stadium on crutches, moved from Manchester City to Barcelona last year for a world record fee reported to be in the region of $470,000. She won a Liga F and Champions League double in her first season in Spain.
Ominously for England, Denmark coach Lars Sondergaard suggested that Walsh's absence had contributed to his side's improvement in the second half.
"I felt a little bit sorry for England when they lost Keira Walsh," he said.
"I hope it's not as bad as it looked but it could also be the reason why we got back into the game when she was not on the pitch."
If Walsh's injury proves to be as bad as feared, it will only increase calls for more research into why, as various studies suggest, women are two to eight times more likely to suffer ACL injuries compared to men in the same sport.
