"It's not necessarily a lifetime ban," Dolan said. "We need to keep the Garden a place that's comfortable and safe. We are putting a ban in place. Hopefully it won't be forever."
The announcement comes two days after Oakley was arrested after getting into an altercation at a New York Knicks game.
Officials said security was called to Oakley's seat after he was shouting at Dolan, sitting not far ahead in his usual seat in the first row behind the baseline. Oakley shoved one security official in the face, though neither he nor any other arena staff threw any punches or pushed Oakley back.
Oakley was handcuffed near an arena exit as he waited for police to arrive.
The NYPD said Oakley was arrested on three counts of assault, all third degree. Police gave him a summons for a desk appearance at a later date.
Knicks owner James Dolan said he loved Oakley as a player, but added that he has a problem with anger, and then added "he may have a problem with alcohol, we don't know."
#Dolan: "Charles has a problem. He has a problem with anger. He is verbally and physically abusive. Those are personality problems."— Ryan Field (@RyanFieldABC) February 10, 2017
The Knicks sent out an email with 16 witness statements from the Charles Oakley incident and say video will be provided later today.
However, Dolan also acknowledged firing his top security chief Frank Benedetto. The Oakley incident was "the last straw," Dolan told Kay.
"From the moment (Oakley) came into the Garden...he came here with an agenda," Dolan said. "We weren't perfect here, but Charles never should have made it to his seats. That's on us."
In an exclusive interview with Eyewitness News, Oakley maintained that he did nothing wrong before he was surrounded by Madison Square Garden security officials. Oakley blamed his strained relationship with the Knicks and Dolan for the altercation.
Oakley said during a separate interview with ESPN Radio that he had been in his seat for just a few minutes when he was surrounded by security, denying that they approached him after he shouted at Dolan.
"Now I'm four rows from this guy, so I'm going to walk in this place and just start hollering, 'James Dolan! James Dolan!' I mean, that's embarrassing, man. I did not do none of that," Oakley said. "I didn't know the man was sitting in front of me at first until they walked over there."
Oakley said he has been told that Dolan must be informed by security whenever he is in the arena, and that MSG staff follows him when he leaves his seat to go the bathroom.
The Knicks have maintained that Oakley was causing trouble even before reaching his seat.
"There are dozens of security staff, employees and NYPD that witnessed Oakley's abusive behavior," the team said in a statement. "It started when he entered the building and continued until he was arrested and left the building. Every single statement we have received is consistent in describing his actions. Everything he said since the incident is pure fiction."
Oakley took to Twitter Friday night, thanking fans and loved ones for their support.
I love NYC I LOVE the Knicks that you for all your love .. I will be holding a Press conference next week Let's go Knicks— Charles Oakley (@CharlesOakley34) February 11, 2017
The 53-year-old Oakley played for the Knicks from 1988-98, helping them reach the NBA Finals.