Barnes' agent, Aaron Goodwin, who also represents Magic All-Star center Dwight Howard, confirmed the deal in an e-mail to The Associated Press on Tuesday but declined to disclose financial terms.
Since reaching the NBA Finals for just the second time in franchise history, Orlando has traded for former All-Star swingman Vince Carter, signed free-agent forward Brandon Bass, matched a five-year, $34 million offer sheet to restricted free agent Marcin Gortat and pursued Barnes to join a group of newcomers that also includes Ryan Anderson from the Carter trade.
Barnes, 29, averaged 10.2 points, 5.5 rebounds and 2.8 assists last season for Phoenix and is regarded as a versatile player off the bench who can guard forwards of all sizes and make the occasional 3-point shot.
The Magic began the week with roughly $1.9 million left from their $5.9 million mid-level exception after signing Bass.
With Hedo Turkoglu leaving in free agency to sign with the Toronto Raptors and Orlando forced to sacrifice Courtney Lee, Tony Battie and Rafer Alston in the Carter trade, last season's Eastern Conference champions will have a decidedly different look next season.
But Magic general manager Otis Smith has been unafraid to aggressively re-shape the supporting cast around his All-Star trio of Howard, Rashard Lewis and Jameer Nelson, undoubtedly aware that the Los Angeles Lakers were the first NBA team since the Detroit Pistons in 1989 to lose in the NBA Finals and come back to win the championship in the following season.
Marc Stein is the senior NBA writer for ESPN.com. Information from The Associated Press was used in this report.