The retired officer told investigators that he went to police at the time and was told it was worthless, and could keep it. But when he mentioned it to an LAPD detective recently, the detective told him to turn it over.
Knives remain an issue with the Simpson case because investigators never found the blade used to stab to death his wife, Nicole Brown Simpson, and her friend, Ronald Goldman, in June 1994. Even a broken carving knife was discovered in a waste tank at Chicago's O'Hare airport.
After finding the knife was found at the perimeter of Simpson's estate, the construction worker took the knife out to the street, where he saw a Los Angeles police officer.
The knife was supposedly found by a citizen, possibly during demolition of the home years ago, and turned over to a now-retired police motorcycle officer who was working as a filming location security guard, Los Angeles Police Captain Andy Neiman said.
"We are looking into that", Neiman said, adding that he was shocked by the possibility that a police officer kept such a knife.
Following news that a knife allegedly unearthed from O.J. Simpson's Brentwood home almost two decades ago is now being investigated by police, Marcia Clark, the lead prosecutor in the murder case against the football star, spoke about the shocking discovery.
The knife came to light in the last month, but Mr Neiman did not say how that occurred.
He also pointed out that even if some evidence were found, it could not be used against Simpson, who is protected by law from being prosecuted for the killings a second time.
But the defense produced the knife - in an envelope that became known as the "mystery envelope" in the preliminary hearing.
One of the key players in the O.J. Simpson 1995 murder trial is saying she does not know what to make of Friday's revelations that authorities are studying a knife they were told was found at the scene by a construction worker in 1998.
In 1997, a civil court jury found Simpson liable for the slayings and awarded millions of dollars in damages to families of the victims.
Simpson's Brentwood mansion was torn down after he moved to Florida following his acquittal.
Simpson is now incarcerated for a 2008 kidnapping and armed robbery conviction. He is eligible for parole next year. Other knives have surfaced during the case but were not linked to the crimes. Dershowitz asked. "It's totally suspicious when there is no chain of custody".
Kobilinsky, who closely followed the murder case and OJ Simpson trial, said that police will test for blood and DNA, but that fingerprint evidence is highly unlikely after this many years.
"The Nevada Parole Board may consider and give relevant weight to any evidence that bears on whether the release of the petitioning inmate could constitute a danger to the public", the state attorney general's office said in a statement.