Of the $54 million, Williams is guaranteed $26.5 million.
Texans general manager Charley Casserly had cautioned earlier in the week that anyone concluding the team had decided on Southern California tailback and Heisman Trophy winner Reggie Bush and was only using Williams as leverage was mistaken.
"This is a decision that took a lot of time to make, but at the end of the day we felt this was the best player for our football team," Casserly said. "Both players, Reggie Bush and Mario Williams, are going to, I think, be great pros. We made the decision to go with defense."
Casserly said that the team has long been interested in Williams and the move should not be that surprising.
"I think if people had just listened to what we had said, they would have seen that we were serious about Mario Williams," he said. "Once we brought him in here our statements never changed that we were seriously considering him for the first pick in the draft and I understand that people didn't believe it, but we always said it and we believed it."
Bush has been embroiled in some controversy this week concerning who paid the rent for a home his parents lived in and whether an agent was involved -- which would be an NCAA rules violation. But Casserly said that did not influence their decision.
"Absolutely not," he said. "We believe in Reggie Bush as a person. We asked him and his attorney the different allegations and both of the denied them. Both of them said that Reggie didn't do anything wrong so we obviously took him at his word."
The choice of Williams by the Texans could dramatically alter the landscape of the early segment of the first round. The New Orleans Saints, with the second choice, have indicated they would snap up Bush if he fell to their slot. New coach Sean Payton said before the start of the draft Saturday that the Saints planned on taking Bush. But the Saints had hinted, in general, that they might entertain trade offers for their pick.
The availability of Bush at the No. 2 spot would almost certainly elicit trade offers.
ESPN's Sal Paolantonio reported that other teams are interested in trading up and trying to get Bush in the draft. Among five teams that have contacted the Saints are the Jets, Raiders and the Packers. The Cardinals might be interested in trading up to No. 2, also, but they are not interested in drafting Bush.
Bush's agent Joel Segal told Paolantonio that he has spoken to the Saints and they have given him every indication that they are preparing to take Bush with the second pick. No contract negotiations have begun as of yet.
Williams becomes the first defensive end taken No. 1 overall since Courtney Brown went to the Cleveland Browns in 2000. He also becomes the 12th defensive lineman to be picked at the top of the draft.
The 6-foot-6½, 292-pound Williams, who left school a year early to enter the draft, has been described as a cross between Julius Peppers and Lawrence Taylor.
He saw his stock soar after his amazing performance at the NFL combine in February, running the 40-yard dash in 4.73 seconds and doing 35 repetitions on the 225-pound bench press.
There were some questions about his work ethic after getting sacks in 11 of his last 23 games, but he has the potential to dominate.
"I have the size and the speed and the athleticism, and to find that in a defensive end is rare," Williams said earlier this week at an interview session in New York. "You just don't see it all the time. I think the last time was Julius Peppers and you know what kind of player he is.
"Everywhere I went, they said, 'We want you,'" he said.
Williams will surely help a Texans defense that ranked 31st total defense last season, 32nd against the rush and 24th against the pass. Team officials like Williams because the Texans have lacked a legitimate pass rusher the last two seasons with the declining health and productivity of two-time Pro-Bowl defensive end Gary Walker. Houston recently released the 11-year veteran.
Williams will join former Baltimore defensive end Anthony Weaver, who signed last month. Weaver had 117 tackles and 14.5 sacks in four years with the Ravens.
"Our pass rush hasn't been what it needs to be," Casserly said. "Mario Williams can give you a pass rush from the defensive end position and the defensive tackle position. He can play all four defensive line positions. He's fast, he's quick and he's athletic. The guy, in our opinion, is a natural pass rusher and can play the run."
The Texans, who haven't had a winning season in their four-year existence, got the first pick after going 2-14 this past season.
They need a playmaker on offense, too, and Bush would have given that to them.
The 6-foot, 200-pound Bush, who wore San Diego's 619 area code painted underneath his eyes during USC games, had 1,740 yards rushing and 2,890 all-purpose yards this past season for the Trojans as a junior. He decided to leave school early to enter the draft after USC lost to Texas in the national championship game.
Bush averaged 8.9 yards per carry this season, caught 37 passes for 478 yards and led the nation in all-purpose yards with 222.3 per game. Bush shared the tailback position for three years with LenDale White, and the two combined for 99 career touchdowns to break the NCAA record of 97 set by Army's Glenn Davis and Felix "Doc" Blanchard from 1943-46.
The move also signifies the team remains confident in the abilities of running back Domanick Davis, who signed a five-year contract reportedly worth more than $21 million before last season.
"The bottom line is he's going to be here and he's going to play, so you've got a player already there that's proven," Casserly said.
Information from The Associated Press was used in this report.