Podsednik will make $1.75 million in 2010 with incentives that could increase his pay to about $2 million.
The deal includes a $2 million option for 2011 with incentives that could earn him an additional $300,000.
Podsednik can void the option if he reaches 525 plate appearances in 2010.
"It was very humbling. It hit home," Podsednik said. "I did have thoughts that creeped in as to if I'd play again. Luckily, I got the opportunity with Chicago. They gave me the opportunity to play and fortunately I was able to help the club out and kind of create another opportunity for me this year."
He should help the Royals fill one of their biggest holes heading into this season: center field.
Kansas City thought it had solved the center field problems by acquiring Coco Crisp in a trade with Boston last offseason. Instead, he went out with a season-ending shoulder injury after 49 games and the team didn't exercise his option for 2010. Crisp later signed with Oakland.
Mitch Maier did a respectable job in center after Crisp went out, but hit just .243 and at times seemed overmatched by big-league pitching. Willie Bloomquist also played some in center, but the Royals like him in a utility role rather than locked into one position.
Kansas City also added outfield help in the offseason, getting Josh Fields from the White Sox -- along with second baseman Chris Getz -- in a trade for Mark Teahen and signing Brian Anderson to a one-year deal.
Podsednik, a former All-Star, should fit the bill a little better.
A third-round draft pick by Texas in 1994, he came up through the minors as a center fielder and has played 361 games there during his nine big-league seasons.
Thing is, he's a pretty good left fielder, too, which should give the Royals some options.
DeJesus proved to be a superb defensive left fielder after moving from center to accommodate Crisp, but may be able to move back with Podsednik's signing. Of course, he could just stay there and Podsednik could play center.
"He's going to get an opportunity to play center and left field," Royals general manager Dayton Moore said. "We just liked the speed that he brings to the outfield, especially here at Kauffman Stadium."
Podsednik also should give the Royals the speed on the bases they lost when Crisp got hurt last season.
A career .277 hitter, he had one of his best seasons with Chicago last year, hitting .304 with 48 RBIs and 75 runs, and had 30 steals. Podsednik has stolen at least 30 bases in each of his five full seasons in the majors, including a career-high 70 with Milwaukee in 2004.
Since DeJesus isn't much of a base stealer, Podsednik would seem like a good fit to lead off.
"It gives us some options," Moore said. "He'll definitely hit at the top of the lineup for us, one or two."
Podsednik offers a few other intangibles, too.
He was an All-Star in 2005, when he hit .290 and stole 59 bases. He also had a walkoff homer for the White Sox in Game 2 of the World Series against Houston later that year, helping Chicago win its first title since 1917.
The signing also means Royals ace Zack Greinke won't have to face Podsednik anymore. Podsednik is 17 for 34 career against last year's AL Cy Young Award winner.
"It's one of those crazy things you can't explain about the game," Podsednik of his success against Greinke. "But I'm excited to play behind this guy, be a teammate of this guy and looking forward to that guy going out and pitching every fifth day."
Jerry Crasnick covers Major League Baseball for ESPN Insider. Information from The Associated Press was used in this report.