The announcement of the gift was made at Saturday's Tennessee-Louisville men's basketball game at Thompson-Boling arena. Alice Houston, Wade's wife and Allan's mother, will represent the family.
Wade Houston was head basketball coach at Tennessee from the spring of 1989 to 1994 and previously was an assistant coach at the University of Louisville.
Allan, who graduated from UT in 1993, played for his father and is the all-time leading scorer for the UT men's program. He graduated as the second leading all-time scorer in the Southeastern Conference. He now plays for the NBA's New York Knicks.
"This is a wonderful gift to Wade Houston and to the University of Tennessee," UT President John W. Shumaker said. "I know Wade is enormously proud of Allan's accomplishments, and this gift speaks clearly about the bond they share as father and son."
Allan Houston had this to say about his decision to fund four scholarships:
"My father has been a strong positive influence in my life. Both as my dad and as my coach, he always stressed getting a good education and giving of yourself to help others. He not only talked to me about these things but he also lived them before me.
"I thought this scholarship was an excellent way to honor him and what he has taught me. I am just proud to be able to show him how much I appreciate him, support my alma mater, and help the next generation in one gesture."