With Boston's loss to Milwaukee, the Cavs have opened a 3½-game lead on the defending champions.
James, who came in with three triple-doubles in his last four games, flirted with another one but finished with 10 assists and eight rebounds.
Al Harrington made five 3-pointers and scored 26 points for New York, which had its three-game winning streak stopped.
The Cavs were back home for the first time since clinching the Central Division title, their first since 1975-76. They took the floor with a new banner hanging from the rafters, but it certainly didn't intimidate the Knicks, who have put themselves back into the playoff hunt with their recent surge.
New York, wrapping up a five-game road trip, scored 29 points in the third quarter to pull within 74-72 entering the fourth.
Harrington made four 3-pointers and scored 13 points in the third for the Knicks, who had trailed by seven at halftime. They caught the Cavs at 79-all and had a chance to take the lead, but couldn't convert.
Zydrunas Ilgauskas then made two free throws and on New York's next possession, Nate Robinson lost his balance on a drive in the lane and went sprawling to the floor. He remained on the baseline as the Cavs pushed the ball up and with a 5-on-4 advantage, Cleveland swung it to Sasha Pavlovic, who drained a 3-pointer from the corner to make it 86-81.
The Knicks closed within 90-87 on a baseline jumper by David Lee, but James found Anderson Varejao underneath for two layups to give Cleveland a five-point cushion.
Harrington and Larry Hughes both missed jumpers before Varejao made two free throws and James canned a jumper to put Cleveland up 96-89 with 37 seconds left.
Delonte West, who returned to Cleveland's starting lineup after missing one game with a bruised back, scored 13 and Ilgauskas had 12.
The 5-foot-9 Robinson, the league's dunk champion who James called a "physical freak" before the game, had 20. Lee had 14 rebounds.
The Cavaliers went 3-0 on their West Coast road trip, but they could have just as easily gone 0-3.
Slow starts put them in a hole and they were forced to rally in the second half to win, a trend that concerns James and one he wants to stop.
"We're going to continue to discuss it until it gets fixed," James said before the game. "It's almost a blessing in disguise. You go out and play as bad as we do at times and we still have the energy to come back. I know it's something we don't want to do. We don't want to get behind and then use all our energy to come from behind.
"We want to try to change it. It's not something we're proud of."
Notes: Knicks G Chris Duhon missed his second straight game with a sore lower back. Coach Mike D'Antoni thinks Duhon will practice Tuesday and will play Wednesday against New Jersey. ... James is in a tight race with Kobe Bryant and Dwyane Wade for league MVP honors. James feels a player should be judged by team success.
"I'm always team first," he said. "Individual accolades come when a team is successful. This is a team game. You shouldn't be judged individually." ... West has taken the braids out of his curly hair and is letting it go. "I'm not going to cut it until we win a championship," he said. ... Ilgauskas, playing with a broken nose, jammed his left thumb in the second quarter. X-rays were negative.
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