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Nichols, 23, was originally selected by the Portland Trail Blazers with the 53rd overall pick in the 2007 NBA Draft. He was then traded to the Knicks on draft day in exchange for a 2008 second round selection. He was waived by the Knicks on October 25.
He played in five preseason games for the New York Knicks and averaged 4.8 points on .571 (8-14) shooting including .667 (4-6) from three-point range in 7.8 minutes per game.
The Cavaliers waived forward Noel Felix who played in three preseason games for Cleveland.
The roster now stands at 15 player.