The Knicks said Davis will have surgery this week and is expected to be out a year after an MRI on Monday also revealed a partial tear of the patella tendon.
Davis was hurt Sunday in the Knicks' 89-87 victory over Miami, crumbling to the court when his knee gave out as he dribbled upcourt on a fast break in the third quarter. Teammates quickly waved for help, and some players looked away as replays of the gruesome injury were shown on the overhead video board.
"I didn't want to watch," Heat forward Chris Bosh said. "I kind of heard the reaction and then when they were playing it back on the Jumbotron like 80 times everybody could hear the reaction of the crowd. You never want to see guys go down like that. I just hope that everything's OK for him and he recovers well."
Davis was taken off the court on a stretcher, with LeBron James and Dwyane Wade offering the popular veteran words of encouragement as he was wheeled away.
Davis has battled injuries in recent years and said he wasn't sure if he would play again after a herniated disk in his back last year kept him out until February.
He became the starter after Jeremy Lin needed surgery to repair torn cartilage in his left knee, and becomes the second Knicks guard to be lost for the season during this series. Rookie Iman Shumpert tore his ACL in Game 1.
Interim coach Mike Woodson said earlier Monday that Davis was in good spirits after the game, calling him a "trooper."
"The one thing he did say is, 'Man, hey, I tried to give you all I could,' and I have a great deal of respect for players that work for me and work for the organization and try to do the best they can to help us win ballgames," Woodson said during a conference call.
Davis joined the Knicks this season and averaged 6.1 points in 29 games while also dealing with a hamstring injury. In his 13th season, he has averaged 16.1 points and was twice an All-Star.
His injury leaves Mike Bibby as the starting point guard for Game 5 on Wednesday, with the Knicks trailing 3-1 in the series.