Lue will be a top assistant under head coach Doc Rivers.
This ends a wild offseason for Lue, who seemingly had a chance to become head coach for the Los Angeles Lakers.
When former Philadelphia 76ers assistant Monty Williams dropped out of the mix in L.A. to take the Phoenix Suns' job, Lue seemed like the clear front-runner. Chris Haynes of Yahoo Sports reported that the two sides engaged in negotiations to make Lue the franchise's next coach.
However, negotiations hit a bump in the road in early May.
ESPN's Adrian Wojnarowski reported Lue and the Lakers had reached an "impasse." Marc Stein of the New York Times added the team wanted to shape Lue's assistant coaching staff rather than letting him do so himself.
The Lakers' initial offer was for three years, according to Haynes, which lined up with LeBron James' remaining contract. Per Haynes, Lue wanted a five-year contract.
As the two sides were unable to find common ground, Lue withdrew from consideration, according to Brad Turner of the Los Angeles Times.
A few months later, Lue joined the Lakers' Staples Center co-tenants.
After spending 11 seasons in the NBA as a player, Lue's coaching career began in 2011. He spent three seasons as an assistant on Rivers' coaching staff, two with the Boston Celtics and one with the Clippers. He worked under David Blatt for a year-and-a-half in Cleveland before getting his first chance to lead a team.
Lue went 128-83 as the Cavs' head coach from 2016 to 2018, spanning two full seasons and parts of two others. With LeBron James leading the way, Cleveland reached three consecutive NBA Finals under Lue, winning the franchise's first-ever championship while becoming the first team ever to rally from a 3-1 Finals hole in 2016.
Cleveland fired Lue in October following an 0-6 start to the 2018-19 season.
The 42-year-old will now bring his experience to a team expected to contend for a title after adding Kawhi Leonard and Paul George this offseason. Caesars lists the Clippers at +375 to win a championship (bet $100 to win $375), second only to the Lakers.
With Lue having already won two rings in a player and one as a coach, the Clippers are hoping he can keep the trophies coming.