The Kings announced the move Saturday night before opening the preseason at the Golden State Warriors.
The 6-foot-9, 207-pound forward was waived by New Jersey on Wednesday. Outlaw averaged 9.2 points and four rebounds in 28 minutes per game last season, making 55 starts.
Outlaw is entering his ninth NBA season. He also has played for Portland and the Los Angeles Clippers. Outlaw has averaged 9.5 points, 3.5 rebounds in 22 minutes per game.
The new amnesty clause the Nets used on Outlaw allows teams a once-a-year-option to wipe a player's remaining contract from the salary cap and avoid any luxury tax penalties.