Sources told ESPN.com that Diop, traded by the Mavericks to New Jersey in February as part of the Jason Kidd deal, will receive the Mavericks' full mid-level exception in a five-year deal starting at nearly $6 million.
Diop cannot officially sign and the Mavericks cannot officially comment until July 9, which is the first day NBA teams can announce signings and trades after a league-wide moratorium on roster moves is lifted.
Dallas also has agreed to a one-year, minimum-salary contract with Gerald Green, a 22-year-old former slam dunk champion who had been unemployed since March. He passed a physical Wednesday and paperwork to make the deal official is being finalized. Since he wasn't on a team when last season ended, he can be signed at any time.
In other free agent news, Eddie Jones has exercised his $2 million option to return next season, when he'll be 37, and the Mavs are trying to keep their other free agents: Devean George, Antoine Wright and J.J. Barea.
Diop was a key member of the Dallas team that toppled its in-state rivals from San Antonio and reached the 2006 NBA Finals. It was the franchise's first trip beyond the Western Conference finals.
Dallas will be Green's fourth team in as many seasons. He was drafted 18th overall by Boston in 2005 and won the dunk contest in 2007. He went to Minnesota in the Kevin Garnett trade, then was sent to Houston a few days after finishing second in the '08 dunk contest. The Rockets used him in one game, then released him.
"Sure, it's been humbling," agent Colin Bryant told The Associated Press. "If you're out of the league, you have a lot of time to think about it. That's where his hunger and focus come from. It's a brand new Gerald Green. The rest of the league will soon find that out."
Marc Stein is the senior NBA writer for ESPN.com. Information from The Associated Press was used in this report.