The Knot Tops were a New York City gang, or perhaps a youth subculture replacing the skinheads of our world in the 1980s, characterized by wearing their hair in knots resting on the tops of their heads Japanese style, aprons, and leather jackets with kanji-looking shapes.
Knot Tops frequently use recreational drugs, especially KT-28s or "katies". These seem to exacerbate the youths already aggressive behavior.
The Knot Top image is adopted by some musicians, notably Red D'Eath of Pale Horse and also by some upper-class sophisticates, as seen in the case of the woman in a smart evening gown sitting down to a genetically modified turkey at Rafael's; her hairstyle combines Knot Top and skinhead elements.
They were quite violent and vicious, forming underworld gangs; while walking to Hollis Mason's home, Dan Dreiberg and Laurie Juspeczyk are attacked by a small group of them in an alley. Dreiberg and Juspeczyk fight them off, severely injuring them. This instance has later repercussions for Hollis Mason, as the Knot Tops later credit one of these gang member's paralysis to Hollis Mason.
The Knot Tops gathered at Bernard's newsstand and mistakenly believe that Hollis Mason was the Nite Owl that freed Rorschach from prison. The small group led by Derf later murder Mason. Those involved were under the influence of katies at the time.
After that event, a Knot Top is seen sitting at Happy Harry's, and tells Nite Owl II apologetically that he has nothing to do with it (of which Nite Owl knew nothing until then) . Enraged, Dan assaults him and threatens to kill everyone of them.