The Manchester United player was involved in a head collision early in the second half at Wembley.
Players immediately called for the physio, who was followed by medical staff to attend to the left-back.
Shaw had battled his way back into the England team and was playing under the gaze of his club manager Jose Mourinho on Saturday night.
He was replaced by Danny Rose after a sustained pause as the medical staff attended to the player.
He was stretchered off in a neck brace, with the fans around Wembley standing up to applaud the player.
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There were no replays shown of the incident on the big screens at Wembley, while viewers on TV did not watch the incident back either.
England released a statement saying: “Luke is awake and alert, having been assessed by our doctor and given an X-ray.
“He’ll stay with us overnight for further observation, with another update to come in the morning.”
Manchester United tweeted: “The #MUFC defender is withdrawn after a clash of heads. We’re all wishing you a speedy recovery, @LukeShaw23.”
BBC commentator Ian Dennis gave an update on Shaw’s situation after the game.
“Encouraging news regarding Luke Shaw. He’s being treated by the doctors at Wembley rather than going straight to hospital,” he tweeted.
And a few minutes after full time it was confirmed the player was walking and talking to staff.
Shaw has suffered serious injury in his career before, having endured a double leg break when on Champions League duty for United in 2015.
The player was ruled out for the rest of the season when getting caught in a challenge against PSV.
He has endured a rocky path back to the United first team since, with Mourinho replacing former manager Louis van Gaal and at times criticising the ex-Southampton star for his performances.
Shaw, 23, had played his way back into the Portuguese’s good books and had started all four of United’s Premier League games so far this season – scoring in the 2-1 win over Leicester last month.
His injury meant there were nine minutes of added time at the Home of Football.
England lost the game 2-1 at Wembley and captain Harry Kane gave his assessment afterwards.
“It was a good game, a good test against a team that keeps the ball well,” Kane said. “It was difficult but we had good spells in the game and we probably created the better chances.
“We tried to press and play with high intensity. There’s a lot of stuff we can learn from but I think we can hold our heads up high.”