It LOOKS like an extremely advanced case of rose slug damage.
The damage is SO complete that I'd bet the culprits have evolved into adult sawflies and moved on.

HOWEVER, you should look them up on the site below.
You can spray with a toxin, OR you can carefully examine the undersides of leaves to find the minute little green worms.
SQUISH 'EM.

Jeri

Here is a link that might be useful: Baldo's Bugs and Roses Website

Do you have Japanese Beetles in your area? They usually do this to my Knock Out roses every year during their 8-10 weeks season.
Olga

Thanks for your responses. I spoke to a neighbor after I posted this and he said we are having a horrible Japanese Beetle problem in our area right now. He suggested tralazine (?) or something like that. I guess I'll do what I have to do, but I am not a big fan of those big bad toxins. Suggestions gratefully accepted.

Bayer Advanced Systemic 2 in 1 Rose and Flower Care will solve the problem. I had an awful problem with JB that I tried to solve organically, but this solved my problem. Buy the spray if you currently have beetles. But get the granular version going in the spring and it won't be an issue.

What ever pesticide you decide to use -- BEFORE you use it -- take time to really read the label information.
Some of these materials will be in your garden for a year or two. Some, longer.
Read ALL of the information in that little brochure that may come with it.
Make sure you know what the side effects are (or are not) BEFORE you put it into your soil.
After all, you have to live there with it. So do your pets and your kids.
Make sure it is something you are comfortable with.

Jeri

I introduced knockout roses to my garden last year. Wow, what a treat. Okay, here's my problem, something is eating my knockouts. It looks as though some one took scissors and cut the buds off the tops. There is no indication that deers are the culprit. I am in a suburban subdivision and have not seen a deer in my yard the 30 years I have been here. Could they be night visitors? Aside from the nipped buds, my darlings are healthy. I also looked for worms. Although I have lots of rabbits and squirrels, the knockouts are out of their reach because of the height. HELP.

shirleynimmons,

Sounds like deer or a disgruntled neighbor?

laura55,

Have you seen any JB's? Something sure is hungry...

Squirrels can climb, and they do nip off rosebuds, mainly in spring. You better hope it is squirrels rather than deer. Deer make gardening nearly impossible without a high fence.

Something's eating your Knockout Roses? Good...oh, wait, you're distressed about it, not happy? Sorry.