Kornet, 21, went undrafted last month out of Vanderbilt. He averaged 13.2 points and 6.2 rebounds during his senior season with the Commodores.
The two-way contract, a new wrinkle in the NBA's collective bargaining agreement, allows teams to have two additional players on their 15-man roster. Two-way deals allow those players to spend up to 45 days with the NBA club during the G League season.
Kornet was a first-team All-SEC selection last season and a two-time All-Defensive team member in the conference. His 150 career threes at Vanderbilt set an NCAA record for threes by a 7-footer, and he's the school's all-time leader in blocks.
ESPN's Chad Ford ranked Kornet as the No. 71 player in the 2017 draft class. He was considered a potential late second-round selection.
Signing him to a two-way contract should allow the Knicks to develop Kornet into the G League, and he could wind up being a valuable stretch big who protects the rim at an above-average rate.