The deal saves the Grizzlies $6.7 million and clears a roster spot. The Suns have 14 guaranteed contracts and $10.8 million remaining in cap space.
Daniels averaged 8.2 points, 1.5 rebounds and 0.7 assists in 67 games last season. He recorded averages of 6.2 points and 1.2 rebounds in his career with the Houston Rockets, Minnesota Timberwolves, Charlotte Hornets and Grizzlies.
Phoenix also signed forward Anthony Bennett and swingman Peter Jok.
Jok joins the Suns following a successful four-year career at Iowa. He led the Big Ten in scoring with 19.9 points per game last season and earned All-Big Ten First Team honors while setting a Hawkeyes' single-season record by shooting 91.1 percent from the free throw line.