The deal is worth slightly above the minimum salary, a league source told Lowe.
The 7-foot Cauley-Stein had played all four of his seasons in Sacramento since the Kings took him sixth overall in the 2015 draft.
The Kings extended a qualifying offer to Cauley-Stein, making him a restricted free agent, but later rescinded it in order to agree to terms with point guard Cory Joseph when free agency opened.
Cauley-Stein's agent, Roger Montgomery of Roc Nation Sports, had told the Sacramento Bee on June 22 that they preferred the Kings not even give Cauley-Stein the qualifying offer so he could instead become an unrestricted free agent.
"We haven't felt that he's been able to get what has been necessary for him to be able to lead the franchise the way he wants to," Montgomery told the Bee. "We are very, very thankful for the opportunity that was presented to him, but we just think it's not working. It's not going to work. It's just time for a fresh start. We need a fresh start and maybe the Kings do, too."
Cauley-Stein excelled at running the floor for a Kings team that likes to play at pace, giving them an athletic center who could take some of the focus away from defenses, pass the ball and finish at the rim.
But consistency has been a trouble spot for the former Kentucky star. Take this past season as an example. Cauley-Stein started it by averaging 17.4 points in October. But his numbers dipped after that, including two months (February, April) in which he didn't even average double figures in scoring.
Cauley-Stein, 25, holds a career average of 10.1 points on 53.4% shooting to go with 6.4 rebounds and 0.8 blocks.
The Athletic was first to report the signing.