The third year of the deal is a team option, sources said, which limits the Nuggets' liability for the 32-year-old, who has made the All-Star team in each of the past four seasons. The signing was first reported by The Vertical.
It's a coup for the Nuggets, who have been searching for a star to pair with their young group of developing players for the past year. Their efforts ranged from offering a huge contract to Dwyane Wade last summer to trying to trade for Kevin Love around the draft last month.
Now they have a multitalented power forward to put alongside budding star Nikola Jokic at center. That could give the Nuggets one of the most dynamic frontcourts in the league.
Millsap averaged 18.1 points, 7.7 rebounds and 3.7 assists per game last season with the Atlanta Hawks. He is strong offensively as well as defensively, which will help the Nuggets as they look to break through and reach the playoffs after missing them the past three seasons.
It also signals that the Hawks are in a full rebuild after trading Dwight Howard last week. In 2014-15, the Hawks won 60 games and were the No. 1 seed in the Eastern Conference. Over the past year, they have lost All-Stars Al Horford and Millsap in free agency and traded Jeff Teague and Kyle Korver for draft picks.
Millsap was ranked No. 5 on the list of top available free agents this offseason by ESPN's Kevin Pelton.