The Knicks signed the guard to a four-year, $71 million offer sheet Thursday, agent Mark Bartelstein said.
Hardaway is a restricted free agent, so the Atlanta Hawks will have two days to match the offer.
The deal was first reported by ESPN.
Hardaway was a first-round pick of the Knicks who spent two seasons in New York before they traded him to Atlanta for the rights to point guard Jerian Grant.
Hardaway struggled early in Atlanta but played well last season, averaging 14.5 points.