The Magic officially announced Simmons' signing Saturday but didn't disclose terms of the contract.
Sources tell ESPN that the deal will be $6.3 million for the first year, $6 million for the second, and $5.7 milllion for the third -- with partial guarantee of $1 million in the final season.
"Jonathon (Simmons) is an elite wing defender that will provide toughness and athleticism to our team," Magic president of basketball operations Jeff Weltman said in a statement. "His tremendous work ethic has helped him continually grow as a player and we are very excited to add him to the Magic."
Simmons, 27, had been a restricted free agent before San Antonio renounced his rights with hopes of signing him to a new contract. Thursday was the final day that teams could lift qualifying offers from restricted free agents.
Simmons blossomed during his two seasons with the Spurs. Although his numbers during the 2016-17 regular season -- 6.2 points in 17.8 minutes per game -- were pedestrian, he showed in the postseason that he was ready for a more significant role.
In 15 games, the 6-foot-6 guard averaged 10.5 points in 20.4 minutes, notably helping the Spurs with MVP finalist Kawhi Leonard hurt.
Simmons went undrafted out of Houston. In 2013, he paid a $150 registration fee to join an open D-League tryout with about 60 players. His performance there eventually led to him to joining the Spurs' affiliate in Austin, Texas, and he ultimately signed a three-year deal with San Antonio in 2015.
ESPN's Michael C. Wright contributed to this report.