Financial terms of his five-year contract weren't immediately released. A news conference to introduce Thomas was planned for Wednesday.
"We are very excited to have such a legendary athlete and proven winner in Isiah Thomas to lead our men's basketball program," FIU athletic director Pete Garcia said. "There is no doubt that Isiah will give FIU a tremendous opportunity to take the basketball program to the highest level."
Thomas helped the Detroit Pistons win two NBA championships as a point guard, then coached the Indiana Pacers before taking over in New York, where an array of problems marred his tenure. He has never coached at the college level.
Undeterred, FIU moved quickly to lock up its top choice for the job.
"I think we can get good players from across Florida and around the country to buy into our plan to make this a top-tier basketball program," Thomas said in a statement released by the school. "I'm committed to growing something here, and strongly believe that over time, we'll put a team on the floor that everyone at FIU can be proud of."
Thomas comes to FIU after several years of losing and legal problems in New York.
The Knicks finished 23-59 a year ago, prompting Thomas' firing.
They never won a playoff game in his stay as president or coach, and his overall record in New York was 56-108.
Knicks president Donnie Walsh said "I think it's a great thing for him and it's kind of what I wanted for him from the day I let him go."
In 2007, a jury ordered Knicks owner Madison Square Garden to pay $11.6 million to a former team executive who was sexually harassed by Thomas. That, along with all the losing by the Knicks, brought on a wave of "Fire Isiah!" chants that would typically start soon after tip-off at MSG.
Then this past October, Thomas had to deal with a new issue.
Officers responded to his New York-area home after a 911 call reporting an overdose on sleeping pills. According to police reports, those officers found a man passed out on the floor and gave him oxygen until an ambulance arrived.
Authorities never publicly identified Thomas as the victim, but a person familiar with the case later confirmed to the AP that it was the former NBA star.
Given all that, it's no surprise that even before the hiring was announced, the mere mention of Thomas coaching at FIU was a galvanizing topic for conversation in South Florida.
"This is bigger than basketball and bigger than athletics," said FIU president Modesto A. Maidique. "Having a nationally-recognized coach like Isiah at FIU will have a positive impact on our university as a whole, helping us achieve additional national exposure."
With Thomas - whose career record in the NBA was 187-223, although he did lead the Indiana Pacers to the playoffs in three straight seasons, 2000-03 - on board, national exposure is certain.
Even after how badly things went in New York, Walsh said he still believes Thomas can coach - pointing to the fact that he led the Pacers to the playoffs.
Walsh also said Thomas feels "energized" about being able to work and teach young players.
"If you really think about it, some of these kids that are coming out of AAU that are going to go to college for one year, that's a pretty good sell," Walsh said. "'Come down to Miami, spend a year with me.' I think he's positioned to do well with recruiting there."
The Golden Panthers have lost 20 games in three of the last four years, and haven't had a winning record since going 16-14 in the 1999-2000 season. FIU finished fifth in the six-team Sun Belt East Division this past season, and only averaged 693 fans for its home games - one of the lowest totals in Division I.
Thomas replaces Sergio Rouco, who was reassigned Monday after posting a losing record in each of his five seasons as coach.
Thomas' hiring brings another coach with strong New York ties to the Sun Belt's schools in South Florida: Former St. John's coach Mike Jarvis just completed his first year at Florida Atlantic, about an hour north of FIU in Boca Raton.
"I think it is a great day for the league, to be very honest with you," Jarvis said. "Anything that will help bring real media attention to the league, it helps. It helps with recruiting, it helps with perceptions that people have."
Jarvis, who said he felt badly for Rouco and lauded the job he did at FIU, added he didn't find it stunning that Thomas chose to start again at the mid-major college level.
"Nothing surprises me in the world of sports anymore," Jarvis said.
Thomas played his college ball at Indiana for Bob Knight, helping the Hoosiers win the 1981 national championship. From there, he spent his NBA playing career with the Pistons, appeared in 11 All-Star games and was the MVP of the 1990 NBA finals, when Detroit won its second straight title.
"Coming back to the college game has always been a dream of mine, and I didn't want to pass up an opportunity to go somewhere where we can build a basketball legacy together," Thomas said.
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