Owner Herb Simon announced the move Wednesday, one day before the NBA draft.
The 55-year-old Bird was the Pacers coach from 1997-2000, taking the team to its only NBA Finals appearance that final year, before returning to the front office in 2003.
He took full control as president of basketball decisions after the 2007-08 season, when Donnie Walsh left to become the New York Knicks’ president.
Bird recently was named the NBA Executive of the Year after building a tough, young team that lost to eventual champion Miami in six games in the playoffs.
The former Indiana State star won three MVP awards and three NBA titles during his Hall of Fame career with Boston.
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