The Magic announced Tuesday that they re-signed the free-agent point guard, adding depth to their backcourt with another reliable veteran. The 34-year-old will become Orlando's third point guard along with starter Jameer Nelson and recently signed Chris Duhon.
Terms of the deal were not disclosed, although the Magic are already over the luxury tax and could only sign players to the veteran's minimum. Williams, who makes his home in central Florida, spent last season with the Magic after taking a year off for personal reasons.
"Jason played very well for us last season," Magic general manager Otis Smith said. "He provides veteran leadership to our backcourt and knows what it takes to win. We are happy to have him back on our team."
Williams averaged six points and 3.6 assists per game last season. He also started 18 games while Nelson was injured, leading Orlando to a 14-4 record in those stints.
Williams is the 13th player on Orlando's roster, meeting the minimum required by the NBA. Orlando is unlikely to sign a 14th player given its salary-cap restrictions.
A slick ballhandler and crafty veteran, Williams was a favorite of Magic coach Stan Van Gundy. The pair also teamed together previously in Miami, and Van Gundy has said Williams helped younger players develop and spreads positive team camaraderie.
Williams also fits seamlessly into the Magic's offense, which surrounds shooters around All-Star center Dwight Howard. Williams had career highs in field-goal percentage (44 percent) and 3-point percentage (38 percent) last season.