The deal will include a team option in the third year, a source said.
An opportunity for Mozgov to play a significantly increased role with Denver opened because of a draft night deal that sent center Kosta Koufos to the Memphis Grizzlies. Mozgov will play behind starting center JaVale McGee under new coach Brian Shaw.
Several sign-and-trade scenarios were discussed over recent weeks, but Mozgov and the Nuggets were committed to re-partnering after getting closer on the terms of the deal in the past week, sources said.
Mozgov, 27, averaged 5.4 points, 4.1 rebounds and 15.6 minutes per game for Denver in 2011-12, but his role decreased this past season under former Nuggets coach George Karl.
A member of the Russian national team, Mozgov still has to complete the NBA's rookie transition program in August, something he had been previously unable to do because of national team commitments.
Mozgov was an important part of the Nuggets' trade of Carmelo Anthony to New York in 2011, the final player Denver management held out to secure before agreeing upon the blockbuster deal.
As an undrafted prospect out of Russia, Mozgov entered the NBA with a three-year, $9.7 million contract with the Knicks in 2010.Related coverage on Yahoo! Sports:
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