The Wizards will receive New Orleans' Mike James and Memphis' Javaris Crittenton in the exchange, with the Hornets acquiring Washington's Antonio Daniels and the Grizzlies coming away with a future first-round pick. New Orleans also received a conditional second-round pick from Memphis.
Arenas has yet to play for the Wizards since signing a new $111 million contract in the offseason after undergoing surgery on his left knee. A firm timetable for Arenas' comeback has not been established, but he has yet to be cleared to participate in contact drills, making a return by Jan. 1 -- as Arenas initially hoped -- seem unlikely.
"This trade strengthens and energizes our backcourt by giving us a veteran guard in Mike James who can help us immediately with his stability and scoring ability and a young guard in Javaris Crittenton who can help us now and in the future with his athleticism," Wizards president Ernie Grunfeld.
The pick is a conditional first-rounder that Memphis had sent to Washington in the trade to acquire Spanish guard Juan Carlos Navarro in the 2007 offseason. Navarro returned to club power FC Barcelona in his native country this season.
"Now we possess all our future first-round picks and have complete flexibility, if needed, for future deals," Memphis general manager Chris Wallace said
The Wizards released guard Dee Brown to make roster room for their new players.
The Grizzlies had been expected to part with at least one point guard this season after stockpiling several. Crittenton, taken 19th overall by the Los Angeles Lakers in the 2007 draft, arrived in Memphis in February as part of the Pau Gasol deal.
James had fallen out of favor in New Orleans under coach Byron Scott and hadn't played in nine of the Hornets' past 10 games. Daniels, who has been a fixture on Washington's playoff teams over the past three seasons, is averaging 5.1 points, 3.6 assists and 22.4 minutes in 13 games.
Daniels "has always been a steady, proven guard in this league," Scott said. "He has won at the highest level and is a clutch player. He also gives us a different look in the backcourt with his size."
Marc Stein is the senior NBA writer for ESPN.com. To e-mail him, click here. Information from The Associated Press was used in this report.