Thomas, 27, averaged 8.3 points and three rebounds in 40 games for New York last season.
Thomas earned praise from the coaching staff and front office last season for his professional approach during the Knicks' disastrous 17-win season.
He will likely come off of the Knicks' bench this season as a reserve forward.
The Knicks now have four roster spots open after retooling their roster via the draft and free agency.
Phil Jackson acquired Robin Lopez, Arron Afflalo and Derrick Williams via free agency and obtained forward Kyle O'Quinn in a sign-and-trade with the Orlando Magic. Jackson also drafted Kristaps Porzingis with the No. 4 overall pick and acquired Notre Dame guard Jerian Grant in a draft-day trade with the Atlanta Hawks.
"We are fortunate to add these four new players to our roster. They bring to the team veteran leadership, talent and youth," the Knicks' president said in a statement released before Thomas' agreement. "These men, in addition to our rookies from the NBA draft, will make for a very competitive team this coming year. We are all looking forward to the season, as we welcome them to the New York Knicks 2015-16 roster."
As far as who will fill out the rest of that roster, Knicks GM Steve Mills remains in contact with representatives for guard Alexey Shved, F/C Lou Amundson and C Cole Aldrich but none of the players come to an agreement, sources say. Guard Ricky Ledo and forward Thanasis Antetokounmpo -- two players on the Knicks' summer league roster -- are also candidates to fill one of the final roster spots.
Guard Langston Galloway is on a deal that is partially guaranteed. Barring something unforeseen, Galloway is expected to be a part of the Knicks' 15-man roster on opening night.
The exact contract numbers for the Knicks' free-agent signees are unclear, but it is believed that the team didn't use its exception to re-sign Thomas. Assuming that's the case, they may have a small amount of cap space remaining.
New York also has the $2.8 million room exception to spend on free agents.
Thomas' agreement with the Knicks was first reported by RealGM.