An examination Wednesday by Dr. James Andrews confirmed a team doctor's earlier diagnosis -- a bone spur is pressing against a ligament in his right elbow.
Moylan, who was put on the disabled list Tuesday, will undergo another two weeks of treatment, the team said Thursday.
The Braves said he'll be re-evaluated after further treatment. If that does not work, Moylan might require reconstructive surgery on his elbow ligament, also known as Tommy John surgery.
"You move on," manager Bobby Cox said before Thursday night's game at Florida, an 8-0 win for Atlanta. "Somebody's got to pick him up."
Moylan, a native of Australia, was 0-1 with one save and a 1.59 ERA in seven games this season. He pitched 90 innings in 80 games as a rookie last year, going 5-3 with one save and a 1.80 ERA.
"We're disappointed, for both Peter and our club, because he was an important part of our bullpen," Braves general manager Frank Wren said, according to the Atlanta Journal-Constitution. "We hope that the rehab in two weeks will improve his chances of returning this year, but understand that may not be possible."
"It's going to be real tough [to replace him]," reliever Blaine Boyer, a rookie who could find himself facing more pressure situations in Moylan's absence, told the newspaper. "Pete, he's just had a rubber arm. He just threw up nasty stuff all the time.
"That's just a huge loss for us. But we've got to pick him up, and I think we've got the guys to do it."
The Associated Press contributed to this report.