Karlsson was spotted skating in public last week, but this was the first time he took part in a regular practice session with teammates.
Senators general manager Bryan Murray had said in February that the Swedish blue-liner was effectively done for the season after suffering a 70 per cent tear of the tendon.
As recently as Thursday, Murray told Hockey Night in Canada Radio on SiriusXM that Karlsson practising with the team was "down the road."
Ottawa has not provided a timeline for when Karlsson will be available to return to game action, with 10 days left in the regular season.
He suffered the injury when his left leg was struck by the skate blade of Pittsburgh forward Matt Cooke. Team owner Eugene Melnyk later said he believed Cooke's action was intentional.
Karlsson's return would be a huge boost for the team. Last year, he won the Norris Trophy as the NHL's top defenceman in just his third season, recording 19 goals and 59 assists.
Ottawa teammates have battled this season through the significant absences of Karlsson, centre Jason Spezza and goalie Craig Anderson, who has since returned.
Jared Cowen, deemed unavailable for the season before it even started due to a hip injury, played his first game on Tuesday.
Spezza, Murray said in Thursday's radio interview, is training in the gym but not yet on skates as he recovers from a back injury.
The Senators have yet to lock up a playoff spot, although statistical breakdowns have them at 96 per cent likely to quallify.
Ottawa has five more games left, beginning Saturday with a home game against Toronto on Hockey Night in Canada (CBC, CBCSports.ca, 7 p.m. ET).
The season has been extended an extra day for the Senators due to a postponement related to the Boston Marathon bombing. Ottawa visits Boston in the finale on April 28.