The two-time All-Star went 7-13 with a 5.72 ERA while slowed by shoulder and elbow injuries the past two seasons. He went 6-8 with a 6.34 ERA in the final year of a four-year, $51 million deal with the Los Angeles Angels last season.
Colon must be added to the Red Sox 40-man roster to get a $1.2 million, one-year contract and have the chance to earn performance and roster bonuses.
As recently as two weeks ago, Red Sox coaches were raving about the right-hander's progress. But in his start against the Yankees on Monday, Colon couldn't get out of the first inning, giving up three hits and four runs.
After the game, he said, "I haven't felt any pain in my arm. That's what I need right now, to stay healthy."
Information from The Associated Press was used in this report.