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Live traps were placed in the area around the tree, but the lizard apparently evaded the traps when it descended the tree and was later spotted in Tonawanda Creek and in an Attica resident's back yard.
Police said the reptile was gone by the time authorities arrived, but the resident snapped a photo to confirm the sighting.
Police said the New York State Department of Environmental Conservation has been informed of the lizard escape.
Members of the public are being asked to report any sightings to police and not attempt to capture the lizard themselves. Police said the species is known to bite and secretes a venom that could lead to a bacterial infection, but would not likely be fatal to humans.
The Police Department said the Nile monitor feeds on small rodents and would likely be spotted basking in sunny areas, as they species is accustomed to temperatures between 82 and 90 degrees.