Casey was sacked by the Raptors a month ago despite leading the team to a franchise-best 59 wins this past regular season.
Casey was named coach of the year by the National Basketball Coaches Association, an award voted on by NBA head coaches.
Casey posted a 320-238 (.573) overall record as Raptors coach.
Casey replaces Stan Van Gundy, who was sacked last month after four seasons with the team.
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Other candidates who advanced to meetings with Gores in the final round of Detroit's search include the University of MI coach John Beilein, the longtime broadcaster Kenny Smith and the San Antonio Spurs assistant coach Ime Udoka. This past season, Detroit traded for All-Star forward Blake Griffin, who they are hoping to build their roster around alongside Andre Drummond.
The Detroit Pistons have hired Dwane Casey as their new coach.
Casey told ESPN last week that a big draw in Detroit was the team's senior adviser Ed Stefanski, who was the Raptors' executive vice-president of basketball operations from 2011-13.
"I'm confident that this team has the pieces in place to compete at a very high level", Mr. Casey added.
Casey was sacked in May, shortly after being dubbed Coach of the Year by the National Basketball Coach's Association. He later back to campus to work as an assistant for Eddie Sutton. Toronto won four Atlantic Division titles during Casey's tenure. But Toronto couldn't get past Cleveland, losing to LeBron James and the Cavs in each of the past three playoffs.