McCaw, 23, played in three games with Cleveland. The Cavaliers had to make a decision by Monday to keep McCaw on their roster at a prorated $3 million for the rest of the season.
The Cavaliers got McCaw after the Warriors declined to match an offer sheet last week.
McCaw averaged 4 points, 1.4 rebounds and 1.4 assists in 57 games last season, his second in the NBA. He was sidelined for almost two months with a bone bruise in his lower back near the end of last season after a horrific fall during a game at Sacramento.
McCaw was the 38th overall pick in the 2016 NBA draft out of UNLV.
In another move on Sunday, the Cavaliers signed guard Cameron Payne to a 10-day contract.
ESPN's Adrian Wojnarowski contributed to this report.