Malone is the son of former NBA coach Brendan Malone and spent the past two seasons with the Golden State Warriors, where he was an assistant under head coach Mark Jackson.
The move comes three days after the sale of the Kings to Vivek Ranadive was completed.
Ranadive and Malone are connected. Ranadive was a minority owner of the Warriors while Malone was an assistant for Golden State.
Malone takes over for the recently fired Keith Smart. Smart guided the Kings to a 48-93 record after taking over head coaching duties for the fired Paul Westphal early in the 2011-12 season.
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