Jose Alvarado has agreed to a three-year contract worth approximately $15 million to remain with the New York Knicks, sources confirmed. The agreement follows his decision to decline a $4.5 million player option for the upcoming season. Although the precise terms are not yet public, the deal is expected to maintain the $4.5 million salary for the 2026-27 season, with increases in the following two years. The contract cannot be officially announced until July 6, in line with NBA rules.

This contract aligns with the Knicks’ financial strategy under owner James Dolan, who has directed the team to stay below the league’s "second apron" salary threshold next season, resulting in a tight budget. Alvarado expressed enthusiasm about his continued tenure with the Knicks, posting on social media that he feels “home,” accompanied by team colors.

Originally, Alvarado’s deadline to decide on his player option was set for a Monday, but both parties agreed to extend it to Friday, following the NBA draft. The 28-year-old guard has emerged as a valuable reserve for the Knicks since joining them just before the February 5 trade deadline. His acquisition came after a series of moves beginning with the departure of Guerschon Yabusele.

Knicks President Leon Rose recently highlighted Alvarado as one of the franchise’s most impactful under-the-radar signings in their championship campaign. Speaking on the “Roommates Show” podcast, Rose emphasized Alvarado’s role in addressing the team’s need for a dependable backup ball handler who could alleviate pressure from the starters.

Alvarado’s playing time fluctuated during the regular season, but he delivered crucial contributions during the playoffs and NBA Finals. Notably, he scored eight points, including two three-pointers, in the Knicks’ historic come-from-behind 107-106 victory in Game 4 of the Finals.

A Brooklyn native, Alvarado grew up locally and played high school basketball at Christ the King, further endearing him to the New York fanbase as a homegrown talent.