Earlier Wednesday, when the NBA's moratorium on trades ended, Houston dealt point guard Kyle Lowry to Toronto for a future first-round lottery pick and forward Gary Forbes.
The Rockets have been collecting draft picks for a potential package to entice Orlando to send All-Star center Dwight Howard their way. The Lowry deal was in place several days ago, and the Camby deal was agreed to on Monday.
The 38-year-old Camby will return to New York, where he played from 1998-2002. Yahoo Sports reported that Camby's deal was for three years and $13.2 million.
The 6-foot-11 Camby was the No. 2 overall pick in the 1996 draft and became a fan favorite in New York before the Knicks dealt him to Denver in 2002. He should become a valuable backup at center to Tyson Chandler, last season's NBA Defensive Player of the Year.
The Rockets obtained Camby from Portland at last season's trading deadline. He averaged 7.1 points and 9.3 rebounds in 19 games.
Houston is also expected to sign Bulls center Omer Asik and Knicks guard Jeremy Lin to offer sheets. Chicago and New York will have three days to match the Rockets' offers.
Lin catapulted to stardom in New York during a dazzling stretch in February where he scored at least 20 points in nine of 10 games. The Knicks are expected to match Houston's offer and retain Lin, who was undrafted out of Harvard.
Lowry played four seasons in Houston and averaged 14.3 points, 4.5 rebounds and 6.6 assists last season.
The Rockets wanted to re-sign Goran Dragic, who took over the starting role and played well after Lowry was sidelined with a bacterial infection. But Dragic agreed to a four-year, $30 million contract to rejoin Phoenix, where he played from 2008-11.
Before the draft, Houston traded forward Chase Budinger and center Samuel Dalembert in separate deals that netted two first-round picks. The Rockets were reportedly shopping the picks to move up in the draft, but eventually used their three first-round draft picks as they stood on Connecticut guard Jeremy Lamb, Iowa State forward Royce White and Kentucky forward Terrence Jones.
Houston opened free agency by getting the 7-foot Asik, a restricted free agent, to agree to a three-year, $25 million offer. The Rockets have needed a big man since Yao Ming became increasingly injury-prone and finally retired last summer.
When Dragic took the Suns' offer, the Rockets traded Lowry and offered Lin a four-year, $28 million deal. The Rockets claimed Lin off waivers last December, but then waived him just before the lockout-shortened season began, so they could sign Dalembert.