Fredette's initial 10-day contract is set to expire Wednesday. He played in two games for New York during his 10-day contract for a total of five minutes, scoring seven points. He received three DNPs during his stint.
The Knicks will look at potential free agents to fill the open roster spot.
Fredette's future is unclear, though sources with knowledge of the situation expect the 27-year-old to return to the Knicks' D-League club, the Westchester Knicks.
Fredette, a former lottery pick, played earlier this season with Westchester, where he averaged 21.8 points and 4.8 assists in 30 games.
Fans at Madison Square Garden chanted Fredette's name several times during his four home games, imploring interim coach Kurt Rambis to play the former BYU star. After scoring four points in 3:13 during Tuesday's loss to Portland, Fredette said he appreciated the support but hoped it wasn't a distraction to the organization.
"I definitely have had a great time and appreciate the fan support, but at the same time, I don't want to be a distraction, and don't want that to be a distraction to anybody, none of my teammates, my coaches, myself," Fredette said. "But I think we do a good job just focusing on the game and focusing on the court."