The team had reportedly narrowed down its search between Casey and John Beillin of the University of MI last week.
Casey was given a five-year deal to lead the Pistons, two people familiar with the situation told The Associated Press on condition of anonymity because the team didn't release the terms of the contract.
Mr. Casey, who led the Toronto Raptors to 59 wins in the most recently completed season, is a finalist for the NBA's 2018 Coach of the Year Award, which will presented on June 25 at the league's awards dinner in Los Angeles.
The Detroit Pistons have a new head coach, despite the fact the team doesn't have a general manager or team president. Having spent many hours with Dwane over the last few weeks, I'm confident he is the right person to get us to the next level.More news: Trump lashes out at United States allies in Twitter rant
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Van Gundy held the title of both head coach and president of basketball operations, which will now be overseen by Ed Stefanski.
In a series of ESPN interviews late last week in conjunction with the N.B.A. finals, Casey spoke optimistically of the Pistons' job and potentially working with the Detroit frontcourt stars Blake Griffin and Andre Drummond. MI coach John Beilein was a finalist for the job before withdrawing his name from consideration last week and San Antonio Spurs assistant Ime Udoka also was a candidate. Casey was sacked on May 11 with one year remaining on his contract at a reported $6.5 million.
"I am excited and honored to join the Detroit Pistons, a franchise with a championship history and a roster that is ready to win now", Mr. Casey said.
Casey coached seven years in Toronto, making the playoffs the past five.