The brainchild of a group of wealthy friends in California, it is the first time the treasure hunt comes to New York, having sparked Internet-driven chases on the West Coast.
"Our biggest day ever! Houston, Mexico City, NYC today! Be safe, be kind, tweet when you find!" the @HiddenCash handle wrote on twitter kicking off the hunt at 10 am (1400 GMT).
The 20 white business envelopes, $50 in each, carry a handwritten message on the front: "Twitter @HiddenCash. Tweet photo when u find. We heart NY."
The money comes from wealthy real estate investor Jason Buzi and a group of anonymous friends, who have given to charity in the past but wanted to do something a bit more fun.
A friend of Buzi's from San Francisco, who gave his name only as Thierry, spoke to AFP as he hid $1,000 in Central Park before setting out to drop another $1,000 in Brooklyn.
"Jason was thinking about doing something a little bit different, more fun - maybe smaller quantities that won't change anyone's life, or maybe it will in a different way, depends what they do with it" Thierry said.
"It's actually encouraging people who find the money and don't have a particular need... to pay forward and help someone in need," he added, his face hidden by dark sunglasses and a jet-black beard.
After Saturday's hunts in New York, Houston and Mexico City, there will be more across the United States, he said.
New York is "the big one" and "definitely one of the places we had to come to," Thierry said. It had taken time, he explained, because the friends didn't know anyone here.
In the end, Thierry volunteered to fly out for three days and supervise the cash drops.
Thierry hides the envelopes and then takes a picture on his mobile phone of the general area, clues that are posted on twitter to drive the hunt.
"Look around the Pond! (59th and 5th). Many there. If you can make it within an hour, it's not too late! Go!" @HiddenCash tweeted with a picture of a rock.
Retweeted 80 times in minutes, the pond in Central Park soon echoed with cries of young men and children hunting under benches and weaving between tourists to find the cash.
Buzi, originally anonymous came forward last week to talk to CNN about his creative act of charity.
After a bit of brainstorming, he and his friends settled on their idea: "What if we just leave cash around, and do a website and kind of tell people, give them clues where it is?" he said.
They began posting clues on Twitter last month about the whereabouts of the money they had hidden in public places under the handle @HiddenCash.
Their tweets turned positively golden in San Francisco, with residents whipped into a lather as they hunted for the loot, and has been rolled out to Los Angeles and Las Vegas.
Buzi told CNN there are now several hundred copycats in different states and cities.
Buzi said an unexpected bonus is that people have lots of fun as they scour their towns and cities, although others find the idea of free money almost too good to be true.
"A lot of people don't trust the motive, thinking it's a business scheme or something we're trying to get out of it, and we're really not," he said.
"We're really doing it to give back in a fun way."