Davies, 23, underwent several hours of surgery after sustaining a lacerated bladder and fractures to his tibia and femur bones in his right leg, the U.S. Soccer Federation said in a statement.
A person in the car with Davies was killed in the accident, federation spokesman Neil Buethe said in the statement.
Davies's injuries were not considered life-threatening, but would rule him out of playing the 2010 World Cup in South Africa.
He would be in hospital for at least a week and would need additional surgeries, the statement added.
"Injuries of this nature usually require a recovery period of six to 12 months and extensive rehabilitation," U.S. Soccer physician Dan Kalbac told reporters.
"Due to Charlie's fitness level, his prognosis recovery and his ability to resume high-level competition is substantially improved."
The accident occurred at about 3:15 a.m. local time on the Virginia side of the George Washington Parkway, Buethe said. It was unclear whether Davies was the driver.
"As a team we were saddened to learn this news," U.S. coach Bob Bradley said. "Our thoughts and prayers go out to Charlie and Charlie's family as well as the people in the car and the families of the others involved."
The United States, who have already clinched a place at the 2010 World Cup finals, face Costa Rica on Wednesday at RFK Stadium in Washington in their final qualifier.
Davies, who also plays for French Ligue 1 side Sochaux, has played in 17 internationals and scored four goals.
