Terms were not disclosed but a league source told ESPN's Adam Caplan that Shorts agreed to a two-year, $6 million deal.
Shorts, who visited with the Texans on Monday, will have a chance to start in Houston, which released longtime star receiver Andre Johnson last week.
Shorts, 27, caught 176 passes for 2,343 yards and 12 touchdowns in four seasons with the Jaguars after the team selected him in the fourth round in 2011. His best season came in 2012, when he caught 55 passes for 979 yards and seven touchdowns.
The 2014 season was supposed to be Shorts' big year since he was in the final year of his rookie contract, but it instead was a disappointment. He did end up leading the Jaguars in receptions but he had a critical fumble in the Jaguars' first game against Tennessee and two bad drops in the first game against Houston.
Shorts never emerged as the team's No. 1 receiver despite being the only player on the roster to enter the 2014 season with more than 32 career catches and finished with 53 catches for 577 yards and one touchdown. The receptions and yardage were the fewest he's had since he caught two passes for 30 yards as a rookie.
The main criticism on Shorts is his durability. He has missed 14 games in his career with various injuries and ended the 2012 and 2013 seasons on injured reserve. Shorts suffered a hamstring strain on the first day of training camp last July and missed three of the Jaguars' first four games.
ESPN.com Jaguars reporter Michael DiRocco contributed to this report.