In the summer of 1988, Knoblauch played for the Wareham Gatemen of the Cape Cod Baseball League along with former MLB first baseman Mo Vaughn.

He was selected by the Twins in the 1st round (25th pick) of the 1989 amateur draft, and made his major league debut on April 9, 1991. That year he played 151 games, batting .281, and won the American League's Rookie of the Year. He helped the Twins win their second World Series in five years, hitting .350 in the ALCS and .308 in the Series. In the eighth inning of Game 7, he made a famous defensive decoy play by faking to field a ball that had actually been hit to the outfield by Terry Pendleton. This action fooled Lonnie Smith, delaying his advance to third base and perhaps from scoring the game winning run; Smith, despite video evidence to the contrary, denies he was fooled.

From 1994-96 he batted .312, .333, and .341; won the AL Gold Glove Award at second base in 1997; and became renowned for his speed, stealing over 40 bases in three consecutive seasons. After the 1997 season, he was traded to the Yankees months later in exchange for four players (including two future All-Stars, Eric Milton and Cristian Guzman) and $3 million. Once a popular player in Minnesota, his very outspoken request to be traded away from the Twins ensured he would be roundly jeered on every successive trip to the Metrodome, and seemed to cast some bad karma on the back end of his career in general.

His arrival in New York was greeted with wide anticipation, with one New York Times writer openly predicting that he and Derek Jeter would form the greatest double-play combination in history. Though he struggled early on with the team, he hit a career-high 17 home runs as the Yankees won a then-American League record 114 games. In the postseason against the Cleveland Indians he committed a serious blunder, arguing with an umpire while play continued, allowing the Indians to win the game. A New York newspaper called him "Knob-Blockhead" but he recovered, helping the team to a World Series victory over the San Diego Padres.

The Yankees won the American League pennant every year he was with the team, winning three World Series championships. His play deteriorated, however, and in 1999 he began to have difficulty making accurate throws to first base, a condition sometimes referred to in baseball as 'the yips' and which had famously ended the career of Steve Sax. By 2000, the problem had grown serious enough that he began seeing more playing time as a designated hitter, and the next year he was reassigned to left field.

His performance at the plate also grew worse, with many observers believing he was preoccupied by his fielding troubles and trying too hard hit home runs. He was benched in the final game of the 2001 World Series (he hit just .056), and left to Kansas City as a free agent in the offseason. He played 80 games in left field for the Royals, batting just .210, and the team declined to offer him a contract. In 2003, having failed to gain a job with a Major League team, he announced his retirement.

A four-time All-Star, in his career Knoblauch batted .289 with 98 home runs and 615 runs batted in. He stole 25 or more bases in 10 of his 12 seasons, finishing with 407 in his career - including 276 with the Twins, the most for the team since moving from Washington in 1961.