Manager Joe Torre slotted Lawton in right field, batting eighth, and used regular right fielder Gary Sheffield as the designated hitter.
In exchange for Lawton, the Yankees sent minor-league pitcher Justin Berg to the Cubs. Berg, 21, was 6-1 with a 3.07 ERA at Single-A Staten Island.
Torre said the addition of the 33-year-old Lawton gives him more lineup options.
"He allows us to do some things we couldn't do before," Torre said. "He's a talented player who gives us more depth. We've been light on the bench.
"I told Matt, 'I can't make you any promises, but you're going to get your share of at-bats,'" the manager said.
Lawton batted .268 with 11 home runs and 49 RBI over 120 games this season with Chicago and Pittsburgh.
"I talked to him last night and this is the first time he's been in a playoff situation," Cubs manager Dusty Baker said. "I just told him to go enjoy it."
Lawton has played for five teams in parts of 11 major-league seasons with a career batting average of .269, a .369 on-base percentage and 164 stolen bases.
"He can steal a base and he has a little pop," Yankees GM Brian Cashman said. "He can do a number of different things from day to day."
To make room for Lawton on the 25-man roster, the Yankees optioned right-handed pitcher Scott Proctor to Triple-A Columbus. Proctor was 0-0 with a 4.50 ERA in 20 games with New York.