The Celtics utilized their midlevel exception, according to president of basketball operations Danny Ainge, signing Terry to a three-year, $15 million deal.
"Jason is one of the best sixth men in the NBA and his versatility in the backcourt is a great addition to our roster," Ainge said Wednesday.
The two sides have had a handshake agreement in place for nearly two weeks now and the team introduced him alongside other offseason acquisitions this past weekend, but the Celtics had used that time to explore sign-and-trade options hoping to free the mid-level chip to use on another outside free agent.
Dallas never warmed to Boston's offers and used its remaining cap space this week to sign O.J. Mayo, one of the players the Celtics reportedly coveted to add depth at the shooting guard spot -- this after losing Ray Allen to the Miami Heat and with Avery Bradley's status uncertain for the start of the regular season after undergoing a pair of shoulder surgeries in recent months.
"The Celtics have such a great tradition of winning and it was something that drew me to the team right away," Terry said. "I look forward to getting out onto the court and helping this team in its pursuit of another banner."