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UCF's McKenzie Milton

UCF quarterback McKenzie Milton won't lose his leg after suffering a devastating knee injury last week ... his family announced Tuesday.

Milton dislocated his right knee after taking a vicious shot in a game against USF last Friday ... and there was some worry that the injury was so gruesome, he might lose his leg.

But Milton's parents said in a statement that while there is nerve damage and he will later require reconstructive knee surgery ... blood flow has been restored to the leg.

"We want to thank the doctors and nurses at Tampa General Hospital and the University of South Florida and UCF medical staff and athletic trainers for their teamwork and prompt attention to McKenzie’s injuries," Milton's parents wrote.