The Pistons pursued Smith the hardest, with agents Brian Dyke and Wallace Prather reaching an agreement with Detroit general manager Joe Dumars on Saturday morning, sources said.
Smith, 27, is one of the NBA's most unique and versatile talents, a 6-foot-9 forward who averaged 17.5 points, 8.4 rebounds and 4.2 assists for the Atlanta Hawks last season.
Smith joins a promising young frontcourt that includes forward Greg Monroe and center Andre Drummond.
Atlanta had been hopeful of working a sign-and-trade agreement with Smith, but he ultimately was able to sign directly into the Pistons' salary-cap space.
Dumars and coach Mo Cheeks met with Smith, Prather and Dyke shortly after midnight at the start of the free-agency period, and made a compelling case to Smith about a possible future with Detroit.
For several teams, Smith was a secondary option once Dwight Howard made his free-agent decision, but the Pistons made clear that he was the franchise's top offseason priority.
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