"Tracy is a veteran who gives us another outstanding outside shooter," said Nuggets coach and president Dan Issel.
As well as the 6ft 7in Murray, who has been with Washington for four seasons, Denver also get a second-round draft choice.
Murray averaged 10.2 points and 3.4 rebounds in 80 games for the Wizards in their last campaign while ranking eighth in the league in 3-point percentage (.430).
In an eight-year NBA career with Washington, Toronto, Houston and Portland, the 29-year-old has averaged 10.2 points per game.
His best campaign was with Toronto in 1993-94, when he averaged 16.2 points and 4.3 rebounds.
"Tracy is a veteran who gives us another outstanding outside shooter," said Nuggets coach and president Dan Issel.
Jones is also joining his fifth NBA team after stints with Dallas, Toronto, Boston and Denver.
The 6ft 8in 39-year-old averaged 2.6 points and 2.6 rebounds in 40 games last season, his first with Denver.
"This is another step in our efforts to continue to improve our team," said Wizards president Michael Jordan. "Popeye Jones is a veteran player who makes our roster more versatile."
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