New York, which was up by 14 in the third quarter, has lost seven of nine.
Bizarre Sequence: The Knicks appeared to take a 115-113 lead with 1:07 in overtime when Raymond Felton found Tyson Chandler for an alley-oop. Chandler's reverse dunk went through the rim but hit Chandler's head on the way through.
The basket was waived off and ruled offensive interference because it did not clear the net.
Shooting blanks: The Knicks' shooting guards struggled mightily. Starter J.R. Smith scored 10 points but missed 10 of 14 shots. Tim Hardaway Jr. had 15 points on just 6-of-16 shooting.
Amar'e Stoudemire had 10 points on 4-for-6 shooting in 18 minutes, but the Knicks were outscored by 19 when Stoudemire was on the floor.
Ray OK: Ray Felton's name had been brought up in trade rumors for weeks, but he wasn't moved at the deadline. In his first game since the trade deadline, Felton played with a renewed confidence.
He had 11 points, eight assists and two blocks in regulation against Orlando, and he added a big 3 in overtime to give the Knicks a two-point lead with 2:20 to play. But he was whistled for a tough blocking foul on Victor Oladipo with eight seconds to go in the first overtime. It gave the Magic a chance to win the game on its final possession of the first overtime.
Metta sighting: Mike Woodson dusted off seldom-used Metta World Peace on Friday night.
World Peace played six minutes and recorded a block, a rebound and a turnover. He also had a strong defensive showing on Afflalo on the Magic's final possession of regulation.
The veteran forward had played a total of eight minutes in the previous seven games.
What's next: The Knicks will conclude their four-game road trip on Saturday against Atlanta.