Two tries to young winger James Schiller, a nephew of Canberra legend Brett Mullins, helped the Raiders to victory on Sunday and kept their finals hopes alive.
It was the first time since round nine Melbourne had their complete spine together, but that lasted just 19 minutes after Papenhuyzen was helped off after a sickening clash of knees with a charging Jack Wighton.
Papenhuyzen was taken to hospital and is expected to have an operation on Monday.
The influential fullback has scored 14 tries in 11 games this season despite missing matches with a posterior cruciate ligament injury and a hamstring issue.
It was a first loss at AAMI Park in seven games for Melbourne, while the Raiders notched a fourth straight win over the Storm at the venue.
The Storm should have scored inside the first minute but Papenhuyzen's pass to winger Nick Meaney was forward.
Meaney wouldn't be denied five minutes later when he dived over after Kenny Bromwich got a pass to him, despite being pressured by two defenders.
Papenhuyzen's radar was offline again when his wild pass in the 10th minute was swooped on by Raiders winger Sebastian Kris, who raced 85 metres to score.
After Papenhuyzen's departure, Schiller rounded off some fast and accurate passing to score the Raiders second try.
By the hour, Melbourne were back in front.
Halfback Jahrome Hughes caught Canberra napping from a quick tap 15m out, slicing between two defenders and burrowing over the line and hooker Harry Grant slid over from dummy-half.
Down to 12 men with Jordan Rapana In the sin-bin for making high contact with Marion Seve, Canberra regained the lead when Schiller, confronted by Nick Meaney, toed the ball ahead and went outside the field of play around the corner flag and touched down for a brilliant solo try.
Nelson Asofa-Solomona was placed on report for making contact with Rapana's head but stayed on the field, while the Raiders lost Schiller to an ankle injury, but not before he saved a try by knocking a pass away.
With five minutes left, Canberra could have put the game beyond Melbourne's reach with fullback Xavier Savage winning the chase to a Jack Wighton grubberkick, but he failed to ground the ball properly.
Within 90 seconds left, Melbourne appeared to have levelled the scores when Hughes got over the line but a review showed he lost control of the ball under pressure from Savage.
Canberra had one more scare at the end, with Melbourne awarded a penalty deep in Raiders territory before a successful captain's challenge overturned the original call.
