Yeah, definately be careful, and don't try and work through pain.
How is your flexibility. Some guys on basketball have some bad knee pain just because of muscle tightness/lack of flexibility.
Basically where the muscles connect to the knee they are all pulling extremely hard, and create added stress.
I do agree with KC, I haven't heard of just the squat movement ever causing pain, while other things have no problem.
Go check with a trainer.