Terms of the deal were not immediately available.
Williams averaged 13.9 points, 6.3 rebounds and 1.3 assists during his fourth season with the Hawks. He was the second overall pick of the 2005 draft after spending one season at North Carolina.
By signing Williams, the Hawks largely have kept together the core of a team that made the second round of the playoffs for the first time in a decade. They already had re-signed point guard Mike Bibby and backup center Zaza Pachulia.
Atlanta also bolstered its backcourt by trading for Jamal Crawford and drafting Wake Forest star Jeff Teague.