The Western Conference champion Thunder will also send guard Daequan Cook, forward Lazar Hayward and centre Cole Aldrich to the Rockets in the deal, which followed failed talks between Harden and Oklahoma City on a contract extension.
ESPN reported that The Thunder offered Harden, who earned the league's Sixth Man award as top reserve last season, $55.5 million over four years. That was less than Harden wanted, and which he will reportedly get from the Rockets.
"We wanted to sign James to an extension, but at the end of the day, these situations have to work for all those involved," Thunder general manager Sam Presti said in a statement.
"Our ownership group again showed their commitment to the organisation with several significant offers.
"We were unable to reach a mutual agreement, and therefore executed a trade that capitalised on the opportunity to bring in a player of Kevin's calibre, a young talent like Jeremy and draft picks, which will be important to our organisational goal of a sustainable team," Presti said.
Harden averaged 16.8 points and 3.7 assists last season, and joined Thunder teammates Kevin Durant and Russell Westbrook on the US men's Olympic team that won gold in London.
Meanwhile Brooklyn Nets all-star Deron Williams insists that Raymond Felton is a better playmaker than the Rockets' new signing, Jeremy Lin.
Lin outplayed Williams last February in a stunning performance off the bench, starting a phenomenon that became known as Linsanity.
But the Knicks opted not to match the $25.1 million deal Lin signed with Houston, having already completed a sign-and-trade deal with Portland to reacquire Felton.
"I would say Raymond Felton is a better point guard than Jeremy Lin, in my opinion," Williams said at the Nets' practice facility.
"He is just proven.
"You'll have to see Jeremy Lin. He had a heck of a run. The numbers he was putting up were All-Star type numbers when he was starting, so we'll see how he does this year.
"But going off of track record, you know I'm going to go with Raymond Felton and Ray probably had his best year, that half season he was there. I guess he likes the bright lights."
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