Williams will replace Hornets general manager Jeff Bower, who compiled a 34-39 record last season after Byron Scott was sacked when the team opened the season with six losses in nine games.
"I have been fortunate to be around this game as a player and an assistant coach. I have had the privilege to play for and coach alongside some of the best coaches in this league.
"The Hornets have a first-class organization and team; this is the perfect opportunity for me."
Williams arrives in New Orleans after five seasons as an assistant under Nate McMillan of the Trail Blazers. He played in the NBA for 10 seasons before knee problems forced him into retirement in 2003.
Terms of the deal were not disclosed.
(Writing by Steve Ginsburg; Editing by John O'Brien)