Pistons president of basketball operations Joe Dumars confirmed the move Thursday morning.
Billups has agreed to a two-year deal — the first season is guaranteed — for $2.5 million a year.
Detroit dealt Billups to his hometown Denver Nuggets early in the 2008-09 season and the team has struggled since making the unpopular trade. Billups was the NBA Finals MVP in 2004 when he led Pistons past the Los Angeles Lakers.
The five-time All-Star turns 37 in September. He bounced back last season to play 22 games for the Los Angeles Clippers after tearing his left Achilles tendon during the 2011-12 season.
Source: Associated Press