"We signed Mike D'Antoni to a multi-year deal," Lakers spokesman John Black said, mentioning the team's owner and top two executives. "Dr. [Jerry] Buss, Jim Buss and Mitch Kupchak were unanimous that Mike D'Antoni was the best coach for the team at this time."
D'Antoni, 61, coached the New York Knicks last season and the Phoenix Suns before that. He will officially take over the Lakers within a week or two, depending how quickly he recovers from knee-replacement surgery.
The Lakers will introduce their new coach at a news conference as early as Tuesday but more likely later in the week. Bernie Bickerstaff will remain the team's interim coach for now.
D'Antoni signed a three-year deal for $12 million. The team holds an option for a fourth year.
Jackson was the overwhelming favorite to return to the Lakers until they heard his informal demands, which included a stake in team ownership, according to a person familiar with the situation.
"He was asking for the moon," said the person, who also declined to be identified because they are not authorized to discuss the situation.
The Lakers then moved quickly to sign D'Antoni. He replaces Mike Brown, who was fired Friday after the Lakers began the season 1-4, their worst start since 1993.
Earlier Sunday, Lakers guard Steve Nash said it would "be a coup" for the Lakers to bring back Jackson, but he also had kind words for D'Antoni.
"Obviously, I think everyone knows how much I love Mike," said Nash, who played four seasons and won two MVP awards under D'Antoni in Phoenix. "If he were the coach, it would be seamless and terrific for me, and I think the team as well.”
D’Antoni was most recently employed by the Knicks, when he was forced to resign under pressure last season after an 18-24 start.
Kobe Bryant did not hide his excitement for the prospect of Jackson returning but, like Nash, he was also on board with D'Antoni.
"They know how I feel about Phil. They know how I feel about D'Antoni," Bryant said Sunday. "I like them both."
D'Antoni's coaching staff with the Lakers likely will start with two longtime assistants -- his brother, Dan D'Antoni, and Phil Weber.
The new Lakers coach has a 388-339 coaching record in the NBA. He led the Suns to the Western Conference finals in 2005 and 2006 with Nash running the show.
Bryant became familiar as a boy with D'Antoni, who was a star in the Italian league in the 1980s, when Bryant's father also played in Italy. D'Antoni helped Olimpia Milano win five league titles and two European club titles. D'Antoni also worked with Bryant on the U.S. national team as an assistant.