Basketball Australia chief executive Larry Sengstock said in a statement Monday that Mills had turned down more lucrative offers from European teams to play in Australia.
The Tigers said on the team's website that Mills' contract includes an "NBA out" clause which allows him to return to the Trail Blazers should the lockout conclude before the end of the NBL season next March. The season begins on Oct. 7.
Mills is in Australia preparing with the national team for three Olympic qualifying matches against New Zealand in early September.
"I am very excited about joining the Melbourne Tigers and playing back home in the NBL for a period while the NBA lockout is in place," Mills told the team's website.
"The Melbourne Tigers has a long history in basketball and I have followed former players such as Andrew Gaze in the past. I look forward to contributing to their program while I am in Melbourne."
Gaze, a former Australian Olympian, played a season of U.S. college basketball at Seton Hall, where his team made the 1989 NCAA finals, losing in overtime to Michigan. Gaze later played with the Tigers.