The forward has agreed to a five-year deal worth $120 million, according to ESPN and multiple reports on Friday.
Batum had scheduled a Friday meeting with the Dallas Mavericks, but he struck a deal hours into free agency to stay in Charlotte.
The Hornets were widely considered the front-runners for Batum because they owned his Bird rights, allowing Charlotte to offer a fifth year on the contract.The fifth season of the contract is a player option, a source said.
Verbal commitments are non-binding. Free agents can officially sign contracts on July 7.
The versatile Batum, 27, gradually solidified himself as a superb two-way player in his first six seasons with the Portland Trail Blazers. But his seventh saw a major drop-off in production, and Trail Blazers general manager Neil Olshey shipped him to Charlotte for Noah Vonleh and Gerald Henderson before last season.
Playing for Hornets coach Steve Clifford, Batum was reborn, averaging career highs in points (14.9) and assists (5.8). He also grabbed 6.1 rebounds a game for the surprising Hornets, who won 48 games before losing to Miami in seven games in the first round of the Eastern Conference playoffs.
Batum rediscovered his two-way, do-everything mold in Charlotte, meshing with Kemba Walker, Al Jefferson and Marvin Williams to give the Hornets some energy and edge, pushing them back into the playoffs for the second time in Clifford's three seasons.
Batum's defense on the wing was a huge part of Charlotte's success, and his ability to guard multiple positions helped the Hornets match up against a variety of opponents.
As the season came to a close, Batum made no secret of his desire to remain in Charlotte. He was widely viewed as one of the most coveted free agents on the market, the kind of versatile veteran who could make a huge difference on any team he joined.
Hornets GM Rich Cho made it clear from the start that the feeling was mutual, and owner Michael Jordan said he would spend the money necessary to help the team continue to build on the momentum of last season.
Rather than entertain a number of suitors and mull leaving for another offer, Batum made the decision to stay put about four hours after the market opened.
The contract will carry Batum, who turns 28 in December, right through his prime and give the Hornets a much-needed veteran presence to build alongside of the dynamic Walker.
With Batum in the fold, the Hornets can now turn their attention to other free-agent matters. Williams, Jeffersonand shooting guard Courtney Lee are all free agents as well, and the Hornets are also in the market for more shooting, depth and toughness to compete in the East.
Information from The Associated Press was used in this report.