The 38-year-old will undergo surgery "as soon as possible", his Yamaha team announced in a statement.
Rossi was on board an endurance bike when the accident occurred.
"Valentino Rossi was involved in an enduro accident during a training activity close to his hometown (of Urbino) on Thursday," Yamaha reported.
The team said he had been transferred to a nearby hospital "for a check-up". A later statement revealed the gravity of the injury.
"Valentino Rossi was diagnosed with displaced fractures of the tibia and fibula of his right leg.
"A further medical bulletin will be issued later on Friday morning, Sept 1st," Yamaha said.
This is the second time Rossi has crashed this year. In May he was treated in hospital for chest and stomach injuries after a motocross training spill.
The nine-time world champion in all categories is lying fourth in this season's MotoGP standings after 12 of 18 races.
Rossi briefly led the 2017 MotoGP championship after three successive podium finishes in Qatar, Argentina and the United States.
After dropping off the pace he reignited his dream of an eighth title in the top division with victory in the Dutch Grand Prix at the end of June.
San Marino hosts the next race on September 10th with Rossi 26 points behind leader Andrea Dovizioso.
READ ALSO: The latest sports news from across Italy