On February 22, 2006, one day before the NBA's trade deadline, Francis was traded to the New York Knicks for small forward Trevor Ariza and the expiring contract of shooting guard Anfernee "Penny" Hardaway. Prior to the trade, the Nuggets reportedly offered both Watson and Kenyon Martin for Francis, but the deal never took place. He made his Madison Square Garden debut on Friday, February 24 when the Knicks faced the New Jersey Nets, and scored 16 points in a 94–90 loss for the Knicks. He wore jersey #1 with the Knicks as his usual #3 was already assigned to Stephon Marbury. Francis has endured a recurring injury, tendinitis in his right knee, and as a result began the 2006–07 season averaging only 11.3 ppg, as opposed to his career 18.4 ppg. He returned on February 10, 2007 vs the Utah Jazz. On March 10, Francis hit a game-winning 3-pointer at the buzzer against the Washington Wizards, ending one of his best games as a Knick in his hometown. On 2007 draft night, June 28, the Knicks traded Francis and Channing Frye to the Portland Trail Blazers for Zach Randolph, Dan Dickau, and Fred Jones; Portland then bought out the remaining two years of Francis's contract for a reported $30 million, making him an unrestricted free agent.