Bartelstein said the deal was a two-year deal for $1.8 million with the second year being a player option.
Baston, a 6-foot-9 athletic power forward who played his college ball at Michigan, has spent the last three years playing for Euroleague powerhouse Maccabi Tel Aviv in Israel.
He averaged 12.8 ppg and 4.9 rpg on 63 percent shooting in 24 mpg for Maccabi last year in Euroleage play. His best season came in 2004-05 when he averaged 14.6 ppg and helped lead Maccabi to a second straight Euroleague title.
Baston is widely regarded as one of the top five power forwards in Europe.
Baston spent half a year in the NBA with the Raptors in 2002-03 and averaged 2.4 ppg in 16 games.
It's been a busy summer for the Pacers who are in the midst of a major overhaul. Baston will be the eigth new player on the Pacers roster this season and should be able to step right in and give the Pacers some depth and athleticism at the power forward position.