Williams, who was selected as the second pick in the 2002 NBA Draft, had been signed by the New Jersey Nets in the preseason, but was cut when the rosters were trimmed.
The Toros waived formed North Carolina guard Melvin Scott to make room for Williams who has not played in a NBA regular season game since severing a nerve in his leg, fracturing his pelvis and tearing three of the four main ligaments in his left knee in a motorcycle crash in June of 2003.
Williams will report to Austin on Friday and will begin practice with the team on Saturday morning.
Williams' No. 22 jersey is one of a handful of retired numbers. He was a two time National Player of the Year at Duke.