Sources told ESPN.com that the Knicks were notified last week that their request for Mobley's $9.5 million salary to be erased from their 2009-10 tax bill has been approved.
The Knicks then waived Mobley on Monday, according to a league memorandum obtained by ESPN.com.
Once Mobley clears waivers later this week, New York will see its luxury-tax bill for July drop from nearly $15 million to $5.1 million. That will also reduce the rebate that teams get for staying underneath the league's $69.9 million luxury-tax threshhold from just over $4 million to $3.7 million.
Mobley retired last season because of a heart condition that has worsened, but New York was waiting for the league's ruling on the matter before waiving Mobley, which opens up a roster spot in case the Knicks want to sign anyone for the final week-plus of the season.
The Knicks had to convince the league office -- which undertakes a length evaluation in all career-ending injury cases -- that they did not know Mobley would have to retire when they acquired him early in the 2008-09 season from the Los Angeles Clippers.
Knicks management has maintained from the start that it was not aware that the 11-year veteran -- who was still playing regularly for the Clippers at the time of the trade -- would have to stop playing until a post-trade examination by a heart specialist.
Mobley said when he retired shortly after the trade that doctors told him he faced significant risks if he kept playing. By walking away now, Mobley said, he was assured that he could live a long life.
"The specialists I've seen made it clear that my heart condition has gotten worse and I couldn't continue to play professional basketball without putting my health and life in serious danger," Mobley said at the time. "As much as I want to keep playing in the NBA, I have no choice but to follow the advice of my doctors and step away from the league."
Hypertrophic cardiomyopathy is the leading cause of sudden cardiac death in people under 30 years old and was linked to the deaths of Boston Celtics forward Reggie Lewis and former Loyola Marymount star Hank Gathers.
An EKG during his post-trade physical with the Knicks showed an irregularity with Mobley's heart, which he already knew existed. The Knicks decided to perform an MRI exam, which revealed the more serious condition that previously had gone undetected. After additional tests with four specialists, Mobley halted his career at 33.
The left-hander averaged 16.0 points in 11 seasons with Houston, Orlando, Sacramento and the Clippers. The Knicks originally targeted Mobley and Tim Thomas in the trade for Zach Randolph because Mobley's contract, which expires after this season, would create salary-cap space to help with New York's expected pursuit of LeBron James and other marquee free agents this summer, but Mobley was expected to start at shooting guard for the Knicks when they got him.
Marc Stein is a senior NBA for ESPN.com.