The deal moves four well-traveled veterans, each with at least eight years of experience and four previous teams on their resumes. Ellis and Manning were both acquired by the Magic in offseason trades with Seattle and Phoenix, respectively, and hadn't played a game in Orlando.
Manning was traded to Orlando with Pat Garrity and two first-round draft picks for Penny Hardaway earlier this month. He won the 1998 Sixth Man award with Phoenix, where he had played the last five seasons.
A two-time All-Star and the first overall pick in the 1988 draft, Manning averaged a career-low 9.1 points per game and nearly hit a career-low with 4.4 rebounds per game last year while playing in all 50 games for the Suns.
Ellis played for Milwaukee coach George Karl during the 1997-98 season, and he also previously played in Milwaukee from 1990-92.
Ellis, who was acquired by the Magic in the deal that brought rookie Corey Maggette to Orlando, averaged just 10.3 points per game coming off the bench for the Sonics last season, his lowest average since 1985-86.
"By acquiring Danny and Dale, we have improved our basketball team," Karl said in a statement. "Danny has shown the ability to play all three front line positions exceptionally well, and Dale is one of the best shooters in the game. This trade makes us a better team."
Gatling averaged a career-low 5.7 points per game last year with the Bucks and spoke openly of his desire for a trade to a team with fewer players at his position. Gatling was an All-Star in 1997, and has also played with Golden State, Miami, Dallas and New Jersey.
Gilliam averaged a career-low 8.3 points per game last year, his third in Milwaukee. The Magic will be Gilliam's sixth team in his 12-year career.
The deal is Orlando's fourth major trade in August as general manager John Gabriel worked on revamping the roster. The Magic also hired Doc Rivers to replace Chuck Daly as coach during the offseason.
The deal was the first for Milwaukee's new general manager, Ernie Grunfeld.
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