ESPN's Adrian Wojnarowski reported the two sides agreed to a three-year, $41 million contract on Friday.
Wood, who made $1.6 million in base salary last season on his previous contract, has largely been a journeyman since his career started as an undrafted free agent following his time at UNLV.
He played for the Philadelphia 76ers in 2015-16, Charlotte Hornets in 2016-17, Milwaukee Bucks and New Orleans Pelicans in 2018-19, and Pistons in 2019-20. He also played the 2017-18 campaign in the G League, where he made appearances in his other three seasons as well.
The versatile forward has been a secondary contributor for much of his time in the NBA, but he hinted at his true potential in the eight games he played for the Pelicans when Anthony Davis was sitting out following a trade demand.
Wood filled in at an admirable level, averaging 16.9 points, 7.9 rebounds and 1.3 blocks a night while scoring 23 or more points in three of the games and notching two double-doubles during that span.
Seizing an opportunity to thrive became a pattern for Wood when he dominated in the immediate aftermath of Detroit's decision to trade Andre Drummond to the Cleveland Cavaliers in February 2020.
Wood dropped 27 points, 12 rebounds and five assists in the first game following the Drummond trade and posted double-doubles in seven of his first 11 contests without the big man.
In all, the UNLV product averaged 13.1 points and 6.3 rebounds while shooting 57.6 percent from the field and 38.6 percent from three-point range in 62 games for the Pistons in 2019-20 before the season was suspended because of the COVID-19 pandemic.
That he is only 25 years old and figures to improve with additional experience is welcome news for Houston, especially given the overall skill set he brings to the table.
Wood is 6'10" with enough length to bother shooters on one end and finish at the rim in pick-and-roll sets on the other. He is also an efficient outside shooter who can take advantage of the space created by playing alongside James Harden—assuming he is still in Houston—and serve as a matchup problem for opposing frontcourts.
He proved he can anchor a frontcourt for stretches without Drummond and Davis and will have the opportunity to capitalize on a significant role with the Rockets.