The guard will reportedly receive $7 million over the next two years, per Wojnarowski.
McConnell spent the past four years with the Philadelphia 76ers and became an unrestricted free agent this summer.
While overshadowed by some of the bigger names on the 76ers roster, the 27-year-old was a key part of the rotation, helping the team transform from one of the worst in the NBA into a legitimate contender.
The talent around him changed, but McConnell has produced at a consistent level throughout his career. He averaged 6.4 points per game last season, similar to his numbers in each of his first three campaigns. His efficiency was also impressive, as he shot a career-high 52.5 percent from the field in 2018-19.
The former undrafted free agent remained a steady presence for the 76ers whether as a starter or reserve, appearing in at least 76 games all four seasons.
The Arizona product's playing time fluctuated in the playoffs, but he came through with some big games in huge moments, including a 19-point effort against the Boston Celtics in 2018.
Although his time in Philadelphia has come to an end, the respect he gained is clear.
McConnell will now get a chance at a fresh start and a larger role. He should see plenty of playing time in the rotation behind the newly added Malcolm Brogdon.
Indiana earned the fifth seed in the Eastern Conference even without Victor Oladipo for much of last season, but the retooled backcourt with Brogdon, McConnell and the recently signed Jeremy Lamb paired with Myles Turner and Domantas Sabonis down low could make this a dangerous team in 2019-20. A healthy Oladipo could be a bonus down the line.
Other transactions will get more press, but this move could be key in helping the Pacers take the next step toward contention.