Most of the money will help build the $275 million graduate business school campus to be named after the athletic company co-founder, university officials said. The remaining $5 million will be used for faculty endowments.
"Stanford Business School was an important part of my life," Knight said in a statement. "This is a once-in-a-lifetime chance to give back to the school and help it continue to push the boundaries of excellence in management education."
The school plans to break ground in 2008.
Knight, who earned a master's in business administration in 1962 and launched the company that would become Nike two years later, has been a substantial contributor to the university, funding the dean's professorship, construction of the Knight Building, and donations to the athletics department. He is worth an estimated $7.3 billion, according Forbes' ranking of billionaires.
Prior to the billionaire's donation, the largest gift by an individual to a business school was $100 million real estate developer Stephen Ross pledged to the University of Michigan in 2004, experts said.
Knight also has given substantially to his other alma mater, the University of Oregon, where he ran track for then-coach and eventual Nike co-founder Bill Bowerman. Knight wrote the largest single check to the university in 1996 when he donated $25 million to its law school, and news reports have put his total contributions to UO at more than $50 million.