The official spoke Monday to The Associated Press on the condition of anonymity because the trade had not been announced.
Detroit was determined to shake up its core last summer following a third straight exit from the Eastern Conference finals, but never made a major deal. Two games into the season, the Pistons have pulled off a blockbuster many expected months earlier.
Pistons spokesman Kevin Grigg declined to confirm the trade, and messages were left for a Nuggets spokesman as well as for the agent of Billups and McDyess.
Iverson was traded to Denver from the 76ers in 2007.