The deal is worth $37.5 million over five years, a source told ESPN.com. The deal also has some hard-to-reach incentives that could boost the value of the contract to $43 million.
The deal came after more than a week of speculation and reports that a deal was done.
With the Williams deal, the Hawks end an expensive summer that allowed them to essentially bring back all of the key pieces from a team that made it to the second round of the playoffs last season.
The team re-signed free agents Mike Bibby and Zaza Pachulia earlier this summer, and they are currently in talks with Joe Johnson about signing an extension. Factor in the addition of Jamal Crawford via trade and first-round draft pick Jeff Teague and the Hawks look even stronger than last season.
Chad Ford is a senior NBA writer for ESPN.com. Information from The Associated Press was used in this report.