Former Bulls guard Gordon will receive a five-year deal for between $55 million and $60 million, while former Bucks forward Villanueva gets a five-year deal for $40 million, sources told ESPN.com's Chris Broussard.
Gordon rejected deals from Chicago in excess of $50 million each of the past two seasons. Milwaukee elected to let the 24-year-old Villanueva become an unrestricted free agent earlier this week, after the Bucks determined that matching any restricted free-agent offers would move the team closer to the luxury tax threshold and limit changing the roster.
The Associated Press first reported the Villanueva signing.
"I don't have any regrets, and I don't have any bitter feelings for the Bulls," Gordon, according to the Chicago Tribune. "Business is business. I'm going to a situation now where winning is the No. 1 priority. I'm happy with my decision."
Free agents can't officially sign with new teams until July 8.
Gordon, who was taken third in the 2004 draft by Chicago, led the Bulls in scoring each of the past four seasons. He averaged 20.7 points per game on 45.5 percent shooting last season. For his career, he has a 21.3 points-per-game average.
Bulls officials had said re-signing Gordon was a top priority after previously failing to keep the former Connecticut star with a long-term contract.
"The Bulls and Pistons always have had a great rivalry," Gordon said, according to the Tribune. "It will be exciting going against [the Bulls], especially [in Chicago] because this is one of the best sports towns anywhere. I'm definitely going to miss the fans. But being on the other side will be fun too."
Villanueva, the seventh overall pick by Toronto in 2006 who has played the past three seasons with the Bucks, averaged 16.2 points and 6.7 rebounds per game last season.
Detroit desperately needed to make a splash this offseason, entering it with nearly $20 million in salary-cap space and coming off its worst season in several years.
The Pistons had a lot of money to spend because Rasheed Wallace and Allen Iverson had expiring contracts. The franchise wanted to infuse the roster with fresh options after breaking up a group of players that won the 2004 NBA title and advanced to six straight conference finals.
Detroit was swept by the Cleveland Cavaliers in the first round this season, mercifully ending a miserable season that soured as soon as All-Star point guard Chauncey Billups was dealt to Denver for Iverson and his cap space.
Michael Curry, who struggled as a rookie coach in a tough situation, was fired Tuesday.
Avery Johnson, Doug Collins and John Kuester were rumored to be top candidates for the job, and general manager Joe Dumars said he wanted a coach in place by next week.
A source told ESPN that Johnson met with the Pistons on Wednesday. Later Wednesday, Collins told ESPN.com that he withdrew from consideration.
Detroit's fifth coach this decade will potentially have an interesting decision to make if the roster remains intact.
While the 6-11 Villanueva can easily slip into the starting lineup, the 6-foot-3, 200-pound Gordon does not seem to have a spot secured.
Gordon likely has to replace leading scorer Richard Hamilton at shooting guard or come off the bench behind him.
Gordon was voted the NBA's top reserve in 2005 and if he accepts that role again, the Pistons would have an intriguing three-guard rotation with him, Hamilton and Rodney Stuckey.
Gordon or Hamilton may a problem with coming off the bench and the next coach could have to deal with poor chemistry just as Curry did. Gordon is just ready for the next chapter.
"Once I tried to sign [the Bulls'] offer last year and the deadline passed and I signed the qualifying offer, I knew leaving was a possibility," Gordon said, according to the Tribune. "Really I don't have any mixed feelings. I'm just excited about my future with the Pistons."
The Pistons now turn their attention to re-signing forward Antonio McDyess, but they'll have competition from the Cavaliers, Celtics and Spurs.
"We are in the process of evaluating our options and will make a decision shortly," McDyess' agent, Andy Miller, wrote in a text message to The Associated Press.
The Bulls, meanwhile, opted not to flirt with the luxury tax threshold. John Salmons, who was acquired from the Kings last season, likely takes over at shooting guard. And Chicago has almost $25 million in expiring contracts in preparation for the free-agent class everyone has been eyeing, 2010, when LeBron James, Dwyane Wade and Chris Bosh can hit the market.
Chris Broussard covers the NBA for ESPN The Magazine. Information from ESPN.com's Marc Stein and The Associated Press contributed to this report.