The 31-year-old, who played for Ireland in the 1995 and the 1999 Rugby World Cups, first sustained the injury in a Premiership match against Gloucester just under a year ago.
O'Shea's hopes of a return to full fitness were finally dashed last week following consultation with his surgeon - following three operations on his ankle.
To be honest I suppose, it was the news I was expecting. But it wasn't what I wanted to hear. I am hugely disappointed.
O'Shea joined London Irish in 1995 and made 127 first team appearances.