The 20-year-old made his Black Cats debut on the final day of last season and has previously enjoyed loan spells at AFC Wimbledon and Woking.
"He's left-footed, got great quality on the ball and is tenacious in the tackle," manager Gareth Ainsworth told the club's official website.
"He's been making big noises up in Sunderland in their Under-21s.
"Billy's a forward-thinking midfielder. He can play out on the left, in the number 10 role and in central midfield."
Knott scored eight times in 20 appearances for Woking last season and scooped AFC Wimbledon's Young Player of the Year award in 2011/12.