The deal had been reported by multiple outlets on Friday.
The Suns envision Thomas as a complement to their double point guard starting lineup of Goran Dragic and Eric Bledsoe.
''Isaiah is one of the most dynamic scorers and playmakers in the NBA,'' McDonough said. ''I have always admired his competitive spirit and his love for the game.''
The 5-foot-9 Thomas averaged 20.3 points and 6.3 assists for the Kings last season, his third in the NBA, and was a restricted free agent. He was one of six players to average at least 20 points and six assists in 2013-14.
''He will be a great fit for our up-tempo attack,'' McDonough said in the news release announcing the acquisition, ''and he will help solidify what we believe is the best backcourt in the league.''
Sacramento gets the rights to forward Alex Oriakhi, Phoenix's second-round draft pick a year ago. The Kings also get a $7 million trade exemption.
The Kings believed Thomas was expendable after their recent agreement to sign point guard Darren Collison.
Bledsoe also is a restricted free agent and the Suns are attempting to re-sign him before another team makes an offer.