The Chiefs insisted they also improved their chances for success in 2009 by making the trade.
The Falcons will send a second-round pick in 2010 to Kansas City in exchange for Gonzalez, the only tight end in NFL history selected to 10 Pro Bowls.
Gonzalez caught 96 passes for 1,058 yards and 10 touchdowns in 2008. He owns NFL career records for tight ends with 916 receptions, 10,940 yards receiving, 76 TDs receiving and 26 100-yard receiving games.
"It's somewhat bittersweet," Gonzalez told FoxSports.com. "I love Kansas City. I grew up in Kansas City. The city means a lot to me. I got there when I turned 21. It will be sad to leave a city I love. But I'm looking forward to making a Super Bowl run in Atlanta every year for the next three or four years."
Chiefs general manager Scott Pioli said it wasn't easy to trade the star, who played in 188 regular-season games for Kansas City.
"From an organizational as well as personal standpoint there are mixed emotions," Pioli said. "I have the highest personal and professional respect for Tony and consider him to be a future Pro Football Hall of Famer."
Pioli said the Chiefs, 2-14 in 2008, did not pursue a trade for Gonzalez, but agreed when the Falcons offered a second-round pick.
"This is something we really feel was a decision in the best short-term and long-term interest of the Chiefs," Pioli said, adding the 2010 draft pick could be used in another deal to acquire more picks in this weekend's draft.
"It may be that pick next year or it may be a pick this year or several picks," Pioli said.
Chiefs chairman Clark Hunt called Gonzalez "one of the finest players in Chiefs history."
Gonzalez will provide a dramatic new look for the Falcons, who were 11-5 last year with rookie quarterback Matt Ryan starting every game.
"Tony's arrival will make an instant impact not only on the offensive side of the ball, but on the overall team in general," said Ryan, the NFL Offensive Rookie of the Year. "I feel privileged to be throwing the ball to a future Hall of Famer and I'm anxious to get on the field to start working with him."
Ryan has a new target and the Falcons have a new leader, but what about newly acquired Chiefs quarterback Matt Cassel? Pioli said there's still plenty of time to bolster the Chiefs' offense before the season.
"There's a lot of time between now and then for us to continue to shape our roster," Pioli said.
When asked how he would replace Gonzalez, new Chiefs coach Todd Haley said, "I don't know I have a direct answer for that right now.
"This is what we felt was best for us right now all things considered," Haley added. "We're doing everything we can to give ourselves the best chance to win games in 2009 and that's what we as a group felt was the best way to go."
The 33-year-old Gonzalez, who has three years remaining on his contract, asked to be traded last October. But then-general manager Carl Peterson said no team Gonzalez was willing to go to made a good enough offer.
The trade addresses one of the Falcons' top needs, freeing the organization to make defense the top priority in this weekend's draft.
The Falcons expect to receive compensatory picks next year for losing several free agents, including cornerback Domonique Foxworth and linebackers Michael Boley and Keith Brooking, making it easier for the team to trade the second-round pick to the Chiefs.
Gonzalez will join Pro Bowl receiver Roddy White to give the Falcons more passing balance.
"With Matt Ryan, Michael Turner, Roddy White and now myself, we have the chance to be in the top five in the league in offense every year," Gonzalez said. "How could I not be excited to join that team?"
Before making the trade, Falcons general manager Thomas Dimitroff said, "Every team in this league dreams of having Tony Gonzalez run out of the tunnel for them."
After realizing that dream, Dimitroff said Gonzalez will add "a new dynamic to the Falcons' offense."
"His career numbers and records are top-notch and he will no doubt be an integral part of our offense," Dimitroff said.
The Falcons said Gonzalez will be in Atlanta for a news conference on Friday.
Information from The Associated Press was used in this report.