League sources told ESPN that Stephenson and the Pelicans have come to terms on a one-year deal.
Chicago-based Priority Sports, Stephenson's new representation, confirmed the agreement via Twitter on Friday afternoon but did not reveal terms.
The Pelicans have been looking to sign a veteran guard in the wake of the news that former All-Star point guard Jrue Holiday will be out indefinitely at the start of the season to help his wife, former U.S. women's national soccer team star Lauren Holiday, as she prepares for surgery on a brain tumor.
The 25-year-old enjoyed a breakout season in Indiana in 2013-14, averaging 13.8 points, 7.2 rebounds and 4.6 assists per game in helping the 56-win Pacers advance to the Eastern Conference finals. But he left the Pacers in the summer of 2014 to sign a three-year, $27 million deal with Charlotte, only to last one season with the Hornets after it quickly became clear that he didn't fit in with them.
Memphis acquired Stephenson from the Clippers via trade in February, and he showed flashes of his Indiana form with the Grizzlies, averaging 14.2 points, 4.4 rebounds and 2.8 assists in 26.6 minutes per game.