Memphis police say Williams and his former University of Memphis teammate Kareem Cooper were pulled over in a Dodge Charger on Friday because Williams wasn't wearing a seat belt. He was charged with driving on a suspended license.
Police then searched the car and say they found more than 17 grams of marijuana and a gun on Cooper. Police said they did not know whether the two men have attorneys.
The Pacers chose Williams with their first-round draft pick in 2006, but his NBA career has been marred by numerous off-court issues, arrests and weight problems.
Williams was acquired by the Dallas Mavericks after two seasons in Indiana. But by January 2009, the Mavericks had sent him home to Memphis.
At the time, Mavs owner Mark Cuban said the team was trying to help Williams work through some issues.
He did not return to the Mavs and remained out of the league this past season.
Williams played under Mavs coach Rick Carlisle as a rookie at Indiana. But Williams had successive run-ins with the law while with the Pacers after leaving Memphis after his freshman year.
Pacers president Larry Bird selected the 6-foot-9 Williams with the 17th overall pick in 2006, but Bird grew tired of Williams' troublemaking as Bird was attempting to clean up the team's thuggish image due to multiple off-court incidents.
Information from The Associated Press and ESPNDallas.com's Jeff Caplan was used in this report.