The rider was diagnosed with a compound fracture of his right humerus, the bone in the upper arm, after parting company with Abbyssial in the JCB Triumph Hurdle.
Walsh was leading the field over the second hurdle when taking a crunching spill, bringing down stablemate Adriana Des Mottes in the process.
Walsh was able to walk gingerly to the ambulance, but could be seen holding his arm.
He was taken to Gloucester Hospital where he underwent surgery on last night.
“He’s in theatre this evening. He has a fractured humerus,” said Dr Adrian McGoldrick, senior medical officer of the Turf Club.
“He will be out for two months plus, but I’m not sure of the full details yet.”
Walsh’s understudy at the Willie Mullins yard, Paul Townend, the rider of Adriana Des Mottes, rode in the second race but gave up after that as he was feeling too sore to carry on.
That left David Casey to step in for the ride on the stable’s On His Own and take second place in the big race of the week, the Betfred Cheltenham Gold Cup.
Mark Walsh, who had a nasty fall from Competitive Edge in the concluding Johnny Henderson Grand Annual Chase, went to hospital for X-rays.
“Mark Walsh had a heavy fall in the last race. He’s gone to Cheltenham General for a chest X-ray,” said Dr McGoldrick, who also reported that Bryan Cooper was having further surgery on his broken leg at Frenchay Hospital in Bristol.
Cooper sustained what has been described as a “complex fracture” when he fell at the second-last flight aboard the Gordon Elliott-trained Clarcam in the Fred Winter Juvenile Handicap Hurdle at Cheltenham on Wednesday.
He was operated on at Gloucester Hospital on Thursday but required further treatment in Bristol.
“Bryan Cooper is in theatre in Bristol and will not be out until late tonight. He’s having a major operation,” said Dr McGoldrick.