The Magic reportedly will pay Donovan $27.5 million over the life of the five-year contract. That would make him one of the highest paid coaches in the NBA.
"The easy decision would have been for me to stay at Florida," Donovan said. "Or I could take the next step and do something that would really challenge me as a person, as a coach, and help me grow, help me get better. I've always been intrigued by the NBA and the 24 hours of basketball."
He replaces Brian Hill, who was fired May 23 after two consecutive losing seasons and a sweep at the hands of the Detroit Pistons in the first round of the playoffs this season.
Donovan coached 11 seasons at Florida, building a basketball powerhouse at the traditional football power. The Gators were 261-103 under Donovan and were int eh national title game three times.