The donation, announced Tuesday, is the school's largest by a former Wake Forest basketball player.
School officials say it will assist a project to expand and enhance the men's and women's locker rooms, and the men's locker room will be named for him.
Paul says the locker room project "inspired me, because that's where players build relationships and create a unifying camaraderie."
The Houston Rockets guard and Winston-Salem native led Wake Forest to its first No. 1 ranking in 2004-05 before becoming a nine-time All-Star and two-time Olympic gold medal winner with the U.S. national team.