The Arsenal player was taken to hospital on Thursday with suspected knee ligament damage following a training ground collision with a teammate.
Xhaka's participation at this summer's World Cup was thrown into doubt but medical tests revealed that the 25-year-old had only suffered a bruise to the bone.
"I am very relieved," Xhaka told reporters after returning to the team hotel.
Switzerland team doctor Pierre-Etienne Fournier added: "We could already see that the ligaments were intact, but we wanted to play it safe, also with regard to the meniscus (cartilage).
"We are very relieved that it is only a painful bone bruise. And we very grateful that we are able to do an MRI scan late in the evening."
Xhaka will nonetheless miss Sunday's friendly away to Spain as well as several training sessions.