Authorities say Scott Smith left the Hasbrouck Heights police force a few years ago after spiraling into disciplinary problems and drug addiction.
Bergen County prosecutors say Smith got into an argument and stabbed John Amendola to death at his Wood-Ridge home in December 2011.
The Record newspaper reports police said they found the murder weapon after searching the home Smith shared with his girlfriend in Wallington.
Authorities said the men had been friends for nearly 20 years.
Smith has been held on $2 million bail since his arrest last year.