The Brooklyn Nets have allowed coach Jason Kidd to pursue an opportunity with Milwaukee after the Bucks fired head coach Larry Drew earlier on Monday.
Kidd had been widely expected to join the Bucks after he had sought increased power over the basketball operations in Brooklyn but was rebuffed.
"The organization has permitted Jason Kidd to pursue a coaching opportunity with the Milwaukee Bucks," the Nets said in a statement on their website late on Monday.
"In exchange for allowing Kidd to depart, the Nets will receive two second round draft picks (2015 & 2019) from Milwaukee.
"A search for a new head coach will begin immediately."
The 41-year-old Kidd went 44-38 in his first season in charge of the Nets.
A 10-time All Star during a glittering 19-year career as a point guard, Kidd was hired by the Nets as their head coach 12 months ago, soon after his retirement as a player.
Kidd had a successful playing stint with the Nets from 2001-2008, which featured successive appearances in the NBA Finals in 2002 and 2003, and was renowned for his intelligence, game management and leadership.
Milwaukee's new ownership team of Marc Lasry and Wesley Edens met Kidd in New York on Friday, just one day after the 2014 NBA draft.
Kidd, who is friendly with Lasry, had been poised to enter the second season of a four-year, $10.5 million deal with the Nets.
Under his guidance, the team won their opening playoff round against the Toronto Raptors before losing to the Miami Heat in the Eastern Conference semi-finals.
Drew, who went a dismal 15-67 in his first season in Milwaukee, had two years left on his contract with the struggling Bucks before he was fired on Monday.
"Despite the challenging season, Larry always handled himself and represented the Bucks in a first-class manner," Bucks general manager John Hammond said in a statement.
"Larry did the best he could in a difficult situation, especially given all of our injuries. I want to thank Larry for all of his efforts, and we wish him the best of luck in his future endeavors."
(Reporting by Mark Lamport-Stokes in Los Angeles; Editing by Greg Stutchbury)