Williams agreed last week to a two-year, $4.3 million contract, and the club made his signing official Friday. The 32-year-old will serve as All-Star Kyrie Irving's backup and bring the club postseason experience along with a player James knows well.
Williams spent parts of three seasons with the Cavs, appearing in the playoffs twice.
A 12-year veteran, Williams played last season for Minnesota and Charlotte. He scored 52 points for the Timberwolves in a game against Indiana on Jan. 13.
Cavs general manager David Griffin called Williams a ''a proven, high-caliber playmaker.'' He says his ability to space the floor at each guard position is essential.
Williams has also played for Utah, Milwaukee, the Los Angeles Clippers and Portland.