Orton was released by Denver on Tuesday, six weeks after he was benched following a 1-4 start. The former Chicago Bears starter, who passed for 3,000 yards each of his first two seasons in Denver, became expendable when the Broncos opted to go with Tim Tebow as their starter.
The Chiefs will be responsible for approximately $2.5 million remaining on Orton's nearly $8.9 million salary this season, but they had plenty of space under the salary cap to make the move.
Orton can become a free agent after this season.
"We have consistently communicated that we are always looking to create competition and depth within our team," Chiefs coach Todd Haley said late Wednesday. "We feel adding Kyle to our roster reinforces that goal and we look forward to having him as a member of the Chiefs."
He's expected to report to the Chiefs on Thursday, though it's unlikely that he'll be up to speed in time for Sunday's game against Pittsburgh.
If that's the case, Tyler Palko will make his second consecutive start. He was 24 of 37 for 230 yards and three interceptions in his first NFL start, a 34-3 loss to New England on Monday night.
"He never had a look that disturbed me before, after, during the game," Haley said of Palko. "I know playing that position, there's no greater test, and getting thrown in to the fire on Monday night and, oh, by the way, six days later playing Pittsburgh, it doesn't get any harder."
Now it appears that Palko will have to fend off Orton to keep the starting job.
"Todd told me after practice that they claimed Kyle, and that's really it," Palko said. "He didn't tell me either way (about starting). Just full speed ahead for Pittsburgh.
"I've been the practice squad quarterback, I've been the No. 3, the No. 2, and the starter last week," Palko added. "I prepare the same way, with the same intensity, and that hasn't changed. I've never wavered or changed my mentality."
The Chiefs waived wide receiver Keary Colbert, who surprisingly earned a job out of training camp after spending three years away from the NFL, to make room on the roster for Orton. Colbert appeared in seven games this season, making nine catches for 89 yards.
Orton, a former Purdue star, was a 2005 fourth-round draft pick and appeared on the way to stardom when he assumed the Bears' starting job for 15 games as a rookie, winning 10 of them.
Often saddled with a reputation for being moody, Orton was demoted his second season in favor of veteran Brian Griese. He earned the starting job back late in 2007 and started 15 games for the Bears in 2008, passing for 2,972 yards with 18 touchdowns and 10 interceptions.
"He was a really good player," said Chiefs running back Thomas Jones, who played with Orton in Chicago. "He's a real good teammate."
His stock never higher, Orton was traded along with a package of draft picks to Denver for Pro Bowl quarterback Jay Cutler. In a curious twist of fate, it was an injury to Cutler that sparked Chicago's interest in claiming its former starter off waivers.
Cutler broke the thumb on his right throwing hand last weekend and might miss the rest of the regular season with the injury. His backup is Caleb Hanie. Chicago signed veteran Josh McCown Wednesday afternoon after losing out on its claim for Orton.
The Cowboys' decision to put the claim in on Orton speaks to their level of concern regarding backup Jon Kitna's back injury. Kitna will miss his second straight game when the Cowboys play Miami on Thursday and there is no timetable for a possible return.
Orton excelled his first two seasons in Denver in an offense run by Josh McDaniels, throwing for 7,455 yards and 41 touchdowns with 21 interceptions.
McDaniels was fired late last season, though, and while Orton remained the starter when John Fox took over, this season got off to a bumpy start. Denver lost four of its first five games, and Fox eventually went with Tebow as his starter, effectively demoting Orton to third string behind Brady Quinn.
Orton's career numbers bear a striking resemblance to those of Matt Cassel, who was hurt near the end of the Chiefs' 17-10 loss to Denver two weeks ago. Orton's completed about 58 percent of his passes while making 66 career starts, with 79 touchdowns and 55 interceptions.
Cassel has started 54 games, completing 59 percent of his throws with 76 TDs and 46 interceptions.
The Chiefs, who are in the midst of a three-game skid that has threatened to eliminate them from contention in the AFC West, will try to get Orton up to speed quickly.
After facing the Steelers on Sunday night, they visit Chicago and the New York Jets, before returning home to face the defending Super Bowl champion Green Bay. A division game against Oakland follows before wrapping up the season at Denver, a game that suddenly has a few more story lines.
"Good for him. Congratulations to him. That will be fun to play him the last game of the year," Tebow said after learning that Orton had been claimed by Kansas City. "Obviously he knows (Denver's offense) pretty well, so he could probably give away a few things, but I think we'll be OK."
Information from ESPN NFL Insider Adam Schefter, ESPNDallas.com's Todd Archer and The Associated Press was used in this report.