The 40-year-old McMillan had coached the SuperSonics since November, 2000, but said after 19 years with the Seattle organization - including some as a player - he just needed a change of scenery. Reportedly he will also make about $1 million more per season with Portland than Seattle was offering.
McMillan replaces interim coach Kevin Pritchard, who took over for the fired Maurice Cheeks 55 games into last season.
In other NBA news, free agent guard Michael Redd has decided to remain with the Milwaukee Bucks and will be highly paid to do so. Redd will reportedly get the maximum contract allowable for someone with his experience $90 - $96 million over six years.
By staying in Milwaukee, Redd will get to play alongside the recent number-one draft pick, center Andrew Bogut of Australia.
Some information for this report provided by AFP and AP.