The deal is reportedly worth $6.1 million over four years.
Hardaway, who played at Michigan before declaring for this year's NBA Draft after his junior season, was the 24th pick in the first round. He averaged 14.5 points and 4.7 rebounds for the national runner-up Wolverines last season.
New York also made official its signing of C.J. Leslie, who was undrafted out of North Carolina State.
The Knicks' summer league team debuts Friday in Las Vegas, and Hardaway is expected to play.