Mills, who worked with the organisation for 10 years as president of MSG Sports, replaces Glen Grunwald, who has been reassigned as an advisor after two years as the franchise's GM.
"I am pleased to be able to welcome Steve back to the Knicks," said team owner James Dolan in a statement. "We look forward to his leadership and believe he is the right person to help us reach our ultimate goal of winning an NBA championship.
"We are grateful for Glen's many years of valuable service and pleased that he will remain with the organisation."
Mills added: "It is an honour and a privilege to work for such a storied franchise, and I look forward to doing whatever it takes to make the Knicks a successful franchise and a team that fans can be proud of, both now and in the future."
Mills worked for 16 years with the NBA in the past.