The seven-time All-Star and two-time scoring champion drew some interest from the Chicago Bulls this summer.
Bulls vice president of basketball operations John Paxson told "The Waddle & Silvy Show" on ESPN 1000 that McGrady had "a very good workout" for the team, but didn't fit with the Bulls' plans.
"He's a good guy. But we just felt that given where we're at, and the way we want to play, we do want to be more of an up-tempo team on the offensive end. We want to run and push the ball," Paxson said.
"It was more based on the youth of our team and where we're at. He'll do well. Tracy looked like he was just going to turn the corner physically," he said.
The 6-foot-8 wing averaged 8.2 points last season, his lowest-scoring season since 1997-98, when he was a rookie with the Toronto Raptors after skipping college. Just two years ago, though, he averaged 21-plus points for the eighth time in his career.
If McGrady accepts his role, likely as a reserve, he could prove to be a bargain playing for the veteran's minimum even if he doesn't approach his career scoring average of 21.5 points.
"I've made a lot of money over my career and I could retire right now and I could be fine financially," McGrady said in February after he was traded by the Rockets to the Knicks while making $23 million in the last year of his contract. "My kids can be fine when they get older. Money is not an issue for me."
McGrady, who is from Bartow, Fla., was drafted No. 9 overall in the 1997 draft by Toronto. He went to Orlando in a sign-and-trade deal in 2000 and was dealt four years later to Houston.
His last healthy season was five years ago. He missed 34 games during the 2005-06 season with back problems; elbow and knee injuries led to him missing 16 games two years later; and microfracture surgery put his career in jeopardy about 1½ years ago.
If he's relatively healthy, happy and effective for the Pistons, McGrady will provide a boost for a team that missed the playoffs this year for the first time since 2001 with its worst record since 1995.
Information from ESPNChicago.com and The Associated Press contributed to this report.