The Chargers plan to release Kaeding as soon as he's off the injured reserve list.
Nick Novak will handle the team's kicking duties for the rest of the season. Kaeding has been limited to four games over the past two seasons.
"We are sitting here at the half-way mark in terms of where we're at," Chargers coach Norv Turner said, according to comments distributed by the team. "We had to make a decision. We were going a man short and we had the chance to add a receiver. Nate is going to continue his rehab. He's been a great player for us. I think the world of Nate. It is a difficult decision, but it's just something we had to do at this point."
Kaeding has not played since suffering a strain right groin against the Kansas City Chiefs on Sept. 30. Selected by the Chargers in the third round of the 2004 draft, Kaeding is the most-accurate kicker in NFL history (87 percent). He has made 180 of 207 field goal attempts in his career and has hit all seven of his field goal attempts this season.
But Kaeding may be best known for missing three field goal attempts in a playoff loss to the New York Jets in 2010. He also missed a playoff field goal in overtime against the Jets during the 2004 season.
He played only one game in 2011 because of a knee injury.