Negotiations had been stuck between Ilgauskas' agent, Herb Rudoy, and the Cavaliers. The team reportedly offered four years and Rudoy wanted an additional season.
Supposedly, Ilgauskas took a bit less money for the additional guaranteed season.
The 30-year-old Ilgauskas has spent the first nine years of his career in Cleveland and didn't want to leave. He's averaged 14.8 points, 7.7 rebounds and 1.9 blocks in his career.
The 7-foot-3, 260-pounder averaged 16.9 points, 8.6 rebounds and 2.1 blocks last season when he earned his second All-Star berth.
He ranked first in the NBA in offensive rebounds (299) and second in offensive rebounder per game (3.8). He was sixth in total blocks (165) and eighth in blocks per game (2.1).
Rudoy was unavailable for comment.
If the salary cap is set at $49 million, the Cavaliers now have about $7 million remaining.
They are trying to sign a starting point guard and are reportedly most interested in Maccabi Tel-Aviv's Sarunas Jasikevicius and Los Angeles Clippers' Marko Jaric. The 6-7 Jaric is a restricted free agent, while the 6-4 Jasikevicius is unrestricted.
Once they get their point guard, they could upgrade the power forward spot as well. Sources indicate they might deal Drew Gooden for a defensive-minded forward who is a strong rebounder.