The deal would have ended a lengthy standoff between the Pacers and Artest, who was deactivated in December after requesting a trade and was suspended for most of last season for his role in one of the worst brawls in US sports history.
ESPN and the Indianapolis Star had reported earlier Tuesday that the deal was imminent, pending league approval.
Artest led the league in steals and was the Pacers' second-leading scorer at 19.4 points a game before being deactivated after publicly requesting a trade in early December. In five years with the Pacers, Artest was an All-Star once and was the NBA's defensive player of the year in 2003-2004.
"He's got to be a little confused right now if they wanted to trade him," Kings forward Shareef Abdur-Rahim said of Stojakovic, who had traveled with the team but stayed behind at the hotel in Philadelphia.
Stojakovic has has a career average of 18.3 points a game.
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