"We are happy that Peyton decided to join us," Chiefs coach Romeo Crennel said in a release. "Peyton is a big, strong, physical back with a lot of talent and he should fit into our system well. We are looking forward to working with him and adding him into our offense."
Contract details have yet to be disclosed, but ESPN.com reported that Hillis will receive $3 million for one year, citing a league source.
"Appreciate all my fans in Cleveland for the support given to me in my time there," Hillis wrote on his Twitter account. "Can't wait to get back on the field and go to work in KC."
Hillis became a fan favorite with the Browns in 2010, when he emerged to lead Cleveland with 1,177 yards and nine touchdowns. He added 477 yards and two more scores through the air, turning heads league-wide and winning the "Madden NFL 12" cover-boy contest.
From there, however, things soured. Hillis sat out last Sept. 25 against Miami with a bout of strep throat, an incident that didn't sit well with some teammates. He also missed a treatment for his ailing hamstring when he left during a work week to get married. Hillis also has changed agents multiple times in the last year.
"Things didn't work in my favor this year," Hillis said in December. "There's a few things that happened this year that made me believe in curses. Ain't no doubt about it."
With the Chiefs, Hillis will be reunited with Brian Daboll, his former offensive coordinator in Cleveland who is now in the same position in Kansas City.
Hillis also could carry the load as the lead rusher if Jamaal Charles isn't fully recovered from a knee injury that sidelined him for the season after Week 2.
Hillis, a seventh-round pick out of Arkansas in 2008, also played two seasons with Denver. Hillis was traded to Cleveland for two draft picks and quarterback Brady Quinn.
The Associated Press contributed to this report.