The team did not disclose terms of the deal, but the Los Angeles Times is reporting it to be a three-year, $24 million pact.
Butler, 31, averaged 15.0 points and 4.1 rebounds in 29 games -- all starts -- with Dallas last season before suffering a ruptured right patellar tendon.
The injury caused Butler to miss the remainder of the season, including the Mavericks' NBA title run.
In 589 career games with the Heat, Lakers, Wizards and Mavericks, the two-time All-Star has averaged 16.6 ppg, 5.9 rpg and 2.9 apg. He was selected by Miami with the 10th overall pick in the 2002 NBA Draft.
"Caron completes what we believe to be a playoff caliber starting lineup," said vice president of basketball operations Neil Olshey. "His professionalism, leadership abilities and basketball skills are an excellent addition to our existing roster composition and another step in building the culture necessary to create a model of sustainable success."
Additionally on Friday, the Clippers signed 2011 second-round draft picks Trey Thompkins and Travis Leslie.