Green’s Dictionary of Slang

(US) to give in, to confess, to surrender, to accept something one dislikes but is not strong enough to fight.

1735		Dyche & Pardon New General Eng. Dict. n.p.: Knuckle or Knuckle Down to stoop, bend, yield, comply with, or submit to.
1744		Dyche & Pardon New General Eng. Dict. (4th edn).
1785, 1788, 1796		Grose Classical Dict. of the Vulgar Tongue n.p.: To knuckle to, to submit.
1811		Lex. Balatronicum [as cit. 1785].
c.1850		F.M. Whitcher Widow Bedott Papers (1883) 35: Miss Coon – she don’t like me cause I hain’t never knuckled tew her.
1859		Hotten Dict. of Modern Sl. etc. 57: KNUCKLE TO, to yield, or submit.
1864, 1867, 1870		Hotten Sl. Dict. [as cit. 1859].
1872		G.P. Burnham Memoirs of the US Secret Service 99: Then the Colonel proceeded to an interview with his prisoner, who at once ‘knuckled’ to the Chief, whose men had run him ‘to [sic] close’. Dow caved!
1902		Bulletin (Sydney) 25 Oct. 21/1: David Syme’s apparent knuckling to Fat, Esq., at the present juncture is not reflecting itself in his attitude towards Chamberlain and co. It is long since the Age has displayed so strong an anti-Imperialistic quality in its leaders.
1951		C. Duffy San Quentin 46: He would have resigned then [...] ‘If it wouldn’t look as though I were knuckling to the cons’.