Smith was cautioned by the league for untying the shoelaces of Dallas forward Shawn Marion during a free-throw attempt in a game Sunday.
But when he tried it again against Detroit's Greg Monroe Tuesday, the NBA announced Smith had been fined $50,000 "for recurring instances of unsportsmanlike conduct."
Smith, who won the NBA Sixth Man of the Year in 2012-13 for averaging 18.1 points per game, this season is averaging 11.3 points in 29 games.
"This is unacceptable. It's just got to stop," Knicks Coach Ron Woodson told ESPN Radio. "I keep saying this every time something pops up, but it's got to stop.
"It's unprofessional ... . You just can't do that. You just cannot do it."