Terms of the deal weren't immediately available.
The 6-foot-2, 190-pound former Florida State player is another addition to a roster that has undergone a major overhaul since the end of last season. Power forward David West and backup point guard C.J. Watson left in free agency. Two-time All-Star center Roy Hibbert was traded to the Los Angeles Lakers in July.
Douglas was the Lakers' first-round draft pick in 2009. Since then, he has played with New York, Houston, Miami, Golden State, Sacramento and New Orleans and has career averages of 7.6 points, 2.2 rebounds and 2.2 assists.
Team president of basketball operations Larry Bird said Douglas is the ''type of player'' Indiana needs to play at a faster pace.