Northern Ireland international Dallas raced into a challenge with City’s Jack Grealish on halfway shortly before the interval and immediately banged his hand on the turf in agony as he hit the ground.
Television replays showed the impact was straight on his knee, and Marsch opened his post-match press conference by stating: “We don’t think it’s good with his knee.
“Obviously with where we are in the season, we’ll miss him very much as he’s the heart and soul of the group, at the forefront in terms of leadership and standing up to big challenges.
“Our hearts and minds are with him and his family. We hope his prognosis is ok and he can have a speedy recovery.
“They’ve had a scan and I don’t want to speak yet, but they say it’s not great.”
The 4-0 scoreline was harsh on Leeds, but does leave them looking over their shoulder at the bottom three. If Everton win their two games in hand, Leeds will be in the bottom three.
Although an unenviable task against a side chasing a second successive Premier League title, it was still a blank return for Leeds.
But Marsch, whose side were ultimately undone by two goals from set-pieces, said: “It’s a shame, we have defended so well in set piece situations. If you take out those two goals, the first 70 minutes were pretty good.
“City are a team who can move the ball and hurt you, but we had control in many parts of the match. I’m proud.
“I challenged them to play with confidence and belief, to go after City and make it hard for them - they did all of that.”
Liam Cooper was named in the starting XI but limped off in the warm-up.
Marsch added: “Liam had a weird feeling in his knee after making a pass in warm up, nobody is sure what it is, he’ll need a scan.
“We’re hopeful it’s not a major issue.”