Matthews was taken from ANZ Stadium on a medi-cab after being caught in an awkward tackle seven minutes from half-time.
It's a cruel blow for Matthews who was coming off his best season since making his NRL debut in 2008.
The injury is the latest setback for the Dragons who are also dealing with a casualty ward that includes Drew Hutchison (knee) and Yaw Kiti Glymin (shoulder) who are both expected to be out long term.
"He's got a dislocated hip, unfortunately. It's something that's come out of the game that's terrible," McGregor said after the game.
"We haven't had much luck there [with injuries]. We lost young Drew before Christmas and Kiti after Christmas. Now we've lost one in the trial. Our top 25 is now down to 22 and that hurts a little bit because they're all quality players."
St George Illawarra head of athletic performance Nathan Pickworth explained the situation to Dragons TV after the game.
"He plugged his knee and had a number of boys come down on him. When I got to him he was in a fair bit of pain and he was pretty sore at that point in time. It was pretty evident that his hip was dislocated, so from there we went through the process of getting him off the field," Pickworth said.
"He's been taken to hospital – he's there now – and he'll be having that hip relocated at hospital tonight with some sedation and then he'll follow that up with the best Sydney hip surgeon tomorrow. That's really good that he's in good hands now."
Dragons skipper Gareth Widdop suffered a similar injury in 2013 while playing for the Storm, and said he could empathise with what his teammate was going through.
The Englishman dislocated his hip in Round 15 and was tipped to miss the rest of the season but returned earlier than expected in time for Week One of the finals.
"It's never great to have an injury like that, and I can imagine what he's feeling right now. It's not the greatest of feelings, but we've got some good staff around us and I'm sure he'll get back on the field at some point," Widdop said.
"First and foremost we'll just make sure he's okay these next few days. He's worked really hard all pre-season and it's just disappointing to get an injury like that."