On May 8, 2008, in a game against the Texas Rangers, Sexson charged the mound towards Rangers starting pitcher Kason Gabbard and threw his batting helmet at him after Gabbard threw a head-high pitch over the middle of the plate, to which Sexson reacted as if it had hit him. Sexson later stated he was frustrated and had a lot going on in his head, including his son being in the hospital and his club's recent struggles. He was suspended six games for the incident. He later appealed the suspension, and it was dropped to five games.
On July 10, 2008, Sexson was released by the Mariners.
On July 18, 2008, Sexson signed with the New York Yankees. Sexson did well in his Yankee debut, by collecting his first hit as a Yankee in the first inning with a single and also bringing in Bobby Abreu for the first run that inning. He went 1–3 with one RBI, one walk, and one strikeout. His only home run (a grand slam) as a New York Yankee came on August 5, 2008, against the Texas Rangers. Sexson was designated for assignment on August 15, 2008, after batting .250 with one home run in 22 games for New York. He was released on August 24, 2008.