It had been reported through the week that Bird was leaving the Pacers and would likely be replaced by Donnie Walsh, who was team president before Bird. The team confirmed Wednesday that Walsh was returning to his former position.
Bird said he would remain with the team through Thursday's NBA's draft. Indiana has the 26th overall selection.
Bird said he decided to step down as team president in part because of health issues concerning his back and shoulder.
Bird had a Hall of Fame career as an NBA player with the Boston Celtics. He coached the Pacers from 1997-2000, posting a 147-67 record and taking the team once to the NBA finals and two other times to the conference finals.
The team went 42-24 this past season, which was second in the NBA Central Division and the third-best record in the Eastern Conference. That led to Bird being voted NBA Executive of the Year.
The Pacers also said Kevin Pritchard, previously director of player personnel, was being promoted to general manager. David Morway resigned that post Tuesday. Pritchard served from 2007-10 as general manager of the Portland Trail Blazers.