Coles agreed to a four-year, $28 million deal, according to a source.
For Coles, it was a victory. He turned down a $6 million guaranteed salary from the Jets. To obtain his freedom, Coles voided the final year of his Jets contract and became a free agent.
The Buffalo Bills were his first visit, but talks with the Bengals heated up over the weekend with the possibility of Houshmandzadeh leaving for the Seattle Seahawks. Coles visited the Bengals earlier this week but left without a contract.
Houshmandzadeh suggested that Cincinnati wasn't sincere about trying to keep him around. Coles got the opposite impression in his case.
"The Bengals were very aggressive right from the start in talking to us," Coles said, in a statement released by the team. "And when a team makes you feel really wanted, that's a factor you're not going to ignore. They said, 'Let's get this worked out,' and we did."
The 31-year-old Coles caught 631 passes during his nine-year career with the Jets. He had 8,095 yards and 44 touchdown receptions during his career in New York.
"Clearly, Laveranues gives our passing game another proven weapon," coach Marvin Lewis said. "He's been durable and reliable, with high production in catches, yards, yards per catch and touchdowns. He's also a passionate player, a guy who will bring a very positive chemistry to our locker room."
Houshmandzadeh's departure left Chad Ocho Cinco and Chris Henry as the two most experienced receivers. The Bengals quickly focused on Coles, who caught 70 passes for 850 yards last season and led the team with seven touchdown catches. He's replacing one of the NFL's most reliable receivers -- Houshmandzadeh had 112 catches in 2007 and 92 last year, even though Carson Palmer was sidelined for most of the season by an injury to his passing elbow.
Palmer has recovered from the partially torn ligament and tendon in the elbow and is expected to be back to full strength. Coles' career high is 91 catches in a season.
"I'm coming off a pretty good year, but I know I can do better," he said. "Anytime you come into a situation with a quarterback like Carson Palmer, you're going to think you can bump up those numbers a little more."
He'll be teamed with Ocho Cinco, who has two years left on his contract and has unsuccessfully lobbied for a trade. Ocho Cinco threatened to sit out last season, then relented after he realized the Bengals were going to keep him.
Coles also threatened to sit out last season unless he got a long-term deal. The Jets had the final two years of his contract guaranteed in a good-faith move to satisfy the receiver, who was a team captain in 2007 and a fan favorite during his second stint with the Jets.
John Clayton is a senior writer for ESPN.com. Information from The Associated Press was used in this report.