Lin had missed two games because of the injury, which he suffered in the second half of last Saturday's win over the Detroit Pistons. It's unclear when Lin will return but a Knicks spokesman said the team hopes to have Lin back during its two-game road trip, beginning Tuesday against Indiana.
Baron Davis started at point guard in place of Lin.
Lin spoke briefly with Dennis Scott of NBA TV before the Hawks game on Friday. Scott said he was told by Lin the knee injury isn't serious, and that his resting is mostly precautionary. Scott was left with the impression Lin would suit up if the playoffs started today.
"We just got to take it a day at a time, see how he is and go from there," Knicks interim coach Mike Woodson said. "He just tweaked it and it's not feeling too well. When he's ready to go, that's going to put a big smile on my face."
Davis replaced Lin in the starting lineup in two Knicks wins earlier this week. He had an uneven performance in New York's win over Milwaukee, scoring 13 points on 3 of 12 shooting with seven assists and nine turnovers.
Davis was solid Wednesday, with 11 points, seven rebounds and six assists in a win over Orlando.
Lin, 23, said last week he'd been experiencing pain in his knee after the Knicks played four games in five nights, adding that the injury was the result of overuse.
In an interview on ESPN New York 1050's "Ruocco and Lundberg Show" on Friday afternoon, Knicks forward Jared Jeffries said Lin has been rehabbing in the pool. Jeffries added that Lin shot for the first time on Friday. He is hopeful Lin will return next week.
"I think he's getting better, he's improving," Jeffries said.
Jeffries has missed five games with a sore right knee. He said he hopes to begin running next week and will have a better gauge on his return date once he starts running.
"I feel good right now, but I haven't done anything," said Jeffries, a reserve forward who is a valuable defender for New York.
Jeffries said both he and Lin's injuries are because of "wear and tear" and have been compounded by the lockout-shortened 66-game schedule.
"You get a small injury and it seems to keep going and keep compounding itself," Jeffries said.
Lin has logged extensive minutes since taking over as the Knicks' starting point guard.
After playing just 24 total minutes in his first month with the team, Lin logged 35.1 minutes per game in February and 30.8 minutes per game in March.
Lin is averaging 14.6 points and 6.1 assists this season, his second in the league. He has made 25 starts for the Knicks (26-25).
In 20 minutes per game, Jeffries is averaging 4.2 rebounds and 0.7 blocks per game.
Lin and Jeffries' absence comes at a pivotal time for New York, which enters play on Friday 2½ games ahead of Milwaukee for eighth place in the Eastern Conference. The Knicks are also 2½ games behind Boston and Philadelphia for first place in the Atlantic Division.
Information from ESPNNewYork.com contributors Ian Begley and Shaun Powell was used in this report.