Felton played college basketball for the University of North Carolina under head coach Roy Williams.

At North Carolina, Felton led the Tar Heels to a national championship before declaring for the NBA draft.

Over his career, Felton was a member of the Charlotte Bobcats, New York Knicks (twice), Denver Nuggets, Portland Trail Blazers, Dallas Mavericks, Los Angeles Clippers and Oklahoma City Thunder.

Felton won the South Carolina Mr. Basketball award as both a junior and senior, and was named Naismith Prep Player of the Year in 2002.

He was the MVP of the 2002 Roundball Classic at the United Center in Chicago, and was selected for the 2002 McDonald's All-American Game (at Madison Square Garden in New York City).

Felton played in the McDonald's All-American Game on the same team with two future New York Knicks teammates, Carmelo Anthony and Amar'e Stoudemire.

In his third and final season at North Carolina, Felton led the Tar Heels along with fellow juniors Rashad McCants and Sean May and freshman Marvin Williams to the 2005 national championship over the University of Illinois Fighting Illini on April 4, 2005, in St. Louis.

University of North Carolina teammates Marvin Williams, Rashad McCants and Sean May were also selected in the draft.

Felton showed promise right out of college, having his breakout game scoring 31 points against the Phoenix Suns in a Bobcats loss.

Felton's best all-around game of his rookie year occurred January 28, 2006, when he recorded 18 points and 13 assists against the Washington Wizards.

Instrumental in the increase was the improved play of teammates Gerald Wallace, Sean May, and Emeka Okafor and the addition of then-rookies Adam Morrison and Walter Herrmann.

Coming into his third year, the Bobcats looked for more talent for Felton to distribute to, bringing in popular scoring shooting guard Jason Richardson.

The Bobcats added Stephen Jackson and Tyson Chandler via trades, and Tyrus Thomas and Larry Hughes late in the season.

Felton hit a number of clutch shots, including a step-back fade-away three-pointer that pinballed into the net against the Toronto Raptors.

On February 22, 2011, Felton was traded to the Denver Nuggets in a three-way deal which also involved the Minnesota Timberwolves that brought Carmelo Anthony to New York.

In his regular season debut with the Blazers, Felton finished the game with 12 points, 6 rebounds, 8 assists and a steal in a 107–103 win over the Philadelphia 76ers.

On July 16, 2012, Felton and Kurt Thomas were traded to the New York Knicks for Jared Jeffries, Dan Gadzuric, the rights to Kostas Papanikolaou and Giorgos Printezis, and a second round draft pick.

At a Las Vegas Summer League game between the Knicks and the Toronto Raptors, Felton told Walt Frazier and Mike Breen he had lost more than 20 pounds (9 kg).

On November 2, 2012, when the season tipped off for the Knicks, Felton recorded 14 points and 9 assists in a 104–84 win over the defending champion Miami Heat.

On November 15, 2012, Felton led the Knicks to a 104–100 road victory over the San Antonio Spurs as he helped his team overcome a 12-point deficit in the fourth quarter with his 25 points and 7 assists.

On December 6, 2012, Felton scored a season-high 27 points in a 112–92 road win over the Heat to hand them their first home loss of the season.

[15] On June 25, 2014, Felton, along with Tyson Chandler, was traded to the Dallas Mavericks in exchange for Shane Larkin, Wayne Ellington, José Calderón, Samuel Dalembert, and the 34th and 51st picks in the 2014 NBA draft.

[15] After missing the first 31 games of the 2014–15 season with an ankle injury he sustained during preseason, Felton made his debut for the Mavericks on December 28 against the Oklahoma City Thunder as he played just over a minute of action and recorded no stats in the 112–107 win.