The forward, who is the team's leading scorer this season, has a small tear in his right labrum, which kept him out of the team's win over the Brooklyn Nets last night.
Coach Mike Woodson told reporters: "Obviously, he knew it was bothering him when he hurt it two weeks ago but he hung in with us trying to make this last push to get in the playoffs.
"I feel for him more than anybody. The kind of season that he had, he deserves to be in the playoffs. I feel bad about that."
The injury will not require surgery but will be re-evaluated in a month.
The Knicks finish their season with a trip to the Toronto Raptors later today.